At the end of 2017, US President Trump signed the Tax Cuts and Jobs Act into law. For corporations, this meant a significant reduction in the tax rate from 35% to 21%, which lawmakers claimed would boost business investment domestically, bring cash held overseas back to the US and create jobs. The question is, did the tax cut achieve all it set out to, and as a result stimulate the U.S. economy?
And while the numbers show increased structural investment, a sharp decline in corporate inversions, repatriation of cash previously held overseas, and a reduction in corporate leverage, should these positive metrics truly be attributed to the tax cut? Or are they the result of other factors? Head of Research Jeff Meli and US Chief Economist Michael Gapen debate these questions in episode six of The Flip Side podcast series.
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This podcast series features lively debates between Barclays’ Research analysts on important topics facing economies and businesses around the globe.
Lowering the US corporate tax rate to 21% not only led to a spike in mergers and acquisitions, it changed how some deals are structured. Barclays' Head of M&A Structuring explains.