The massive corporate tax cut passed by the U.S. Congress in late 2017 has done little to boost investment and job creation, according to a recent survey.
The survey, conducted by the National Association for Business Economics, indicated that U.S. firms saw improved profit margins in the third quarter of 2018, but the tax reform "has not broadly impacted hiring and investment plans."
In the country’s biggest tax overhaul in three decades, the corporate tax rate was slashed from 35 percent to 21 percent in December last year.
U.S. President Donald Trump and Republicans have expected the move to boost corporate investment and hiring and keep companies from leaving the United States, while Democrats have criticized the law as a giveaway to the wealthy.
A series of evidence has shown that reality hasn’t met Republicans’ expectations.
Prior to the survey, Federal Reserve economists had suggested that funds repatriated in the first quarter of 2018 have been "associated with a dramatic increase in share buybacks" and "evidence of an increase in investment is less clear," according to a paper published in early September.
The third-quarter GDP report released by the U.S. Commerce Department last week also showed that growth in business investment has slowed significantly, after an increase in the first two quarters.
Non-residential business investment grew at an annualized rate of just 0.8 percent in the third quarter, the report said.>