Trump's tax law already saved some of America's biggest corporations $13 billion this year
- The 180 S&P 500 companies that have reported first quarter earnings saved just under $13 billion from the new tax law.
- The financial sector saw the biggest decrease in tax bills, with $4.6 billion in savings.
Some of the biggest companies in the world have approximately 13 billion reasons to thank President Donald Trump and Republicans this quarter.
According to a new analysis by Bloomberg, the 180 S&P 500 companies that reported first quarter earnings so far saved approximately $13 billion due to the GOP's recently implemented tax reform law.
The law cut the corporate rate to 21% from the previous 35% federal rate. This cut, along with other changes to the tax code, helped drive the savings for large corporations.
The Bloomberg analysis showed that the financial industry banked the most in tax cut savings. This is unsurprising, given that the five major US banks - Goldman Sachs, Wells Fargo, Bank of America, JPMorgan Chase, and Citigroup - raked in $2.5 billion in tax savings in the first quarter alone. Overall, the financial sector received $4.6 billion in first-quarter savings.
Following were the industrials industry ($2.3 billion in savings), information technology ($1.6 billion), telecoms ($1.4 billion), and healthcare ($1.3 billion), per Bloomberg.
While both Republicans and Democrats said firms would save more money under the GOP tax law, the parties are divided on what they expect these corporations to do with the savings.
Republicans argued that the savings will go primarily to workers and investments. In turn, GOP leaders said, these investments will boost the US economy. On the other hand, Democrats argue shareholders will be the biggest winners - and buybacks the most likely destination for the tax cut savings.
A report from UBS showed that capital expenditures for S&P 500 companies that have reported earnings so far grew 39% in the first quarter, compared to 11% for dividends and 18% for buybacks. The report did not give the absolute values for the spending, so it was unclear whether shareholders are still getting a larger proportion.