Companies Use Tax Cut Savings to Buy Their Own Shares<br />Cisco said this month that in response to the tax package, it would bring back to the United States<br />$67 billion of overseas cash, using $25 billion to finance additional share repurchases.<br />Companies typically decide to make long-term investments in things like new workers<br />and factories based on whether they will make the company more profitable — not merely because the companies are sitting on a pile of money that they otherwise would have paid in taxes.<br />American companies in the have announced more than $178 billion in planned buybacks — the largest<br />amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.<br />But the vast majority of the billions of dollars in planned share purchases will benefit<br />the richest 10 percent of American households, who own 84 percent of all stocks.<br />President Trump promised that his tax cut would encourage companies to invest in factories, workers<br />and wages, setting off a spending spree that would reinvigorate the American economy.<br />But the purchases can come at the expense of investments in things like hiring, research<br />and development and building new plants — the sort of investments that directly help the overall economy.<br />Warren E. Buffett said in his annual letter to investors on Saturday<br />that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law.
