Editor’s Note: Deconstructing Legislative Outcomes
Policy and legislative changes may cause business leaders to hesitate before making their next move.
As of May, it seems that the corporate executives at some of America’s largest companies have returned much of their tax savings to shareholders. Howard Silverblatt, senior index analyst S&P Dow Jones Indices, told Money that companies are on track to plow a record $1 trillion into boosting dividends and buying back their own stock this year. This artificially increases a company’s earnings per share but does little to improve the economy and create jobs — especially in an economy that’s essentially at full employment.
There’s also some concern that the TCJA could make investment outside of the U.S. financially appealing. For instance, a subsidiary of an American business could be subject to lower taxes than a business earning income in the U.S., explains CBRE’s Alex Frei. Also, businesses will not have to pay U.S. taxes on money earned from plants outside the country if those earnings amount to 10 percent or less of the total investment.
While the TCJA is saving companies money, the just enacted aluminum and steel tariffs may add to U.S. companies’ supply chain costs, as well as to consumers’ costs. The products using imported steel and aluminum — autos, appliances, etc. — will become more expensive. “Changes to the existing tariff structure could negatively impact our current U.S. production and further expansion,” said Jim Trainor, a Hyundai spokesman, in an email to IndustryWeek. In addition, other nations are threatening to impose retaliatory tariffs, thereby making U.S. exports more expensive.
Add to this quagmire a rollback of environmental regulations that may or may not be advantageous to business. Submitting to the lower environmental standards may save companies money upfront in site development and buildout but carry longer-term consequences in terms of higher long-range operating costs, employee wellness and retention, and negative press.
All of these policy and legislative changes are giving companies a lot to think about as they make new facility and expansion plans and may, in fact, cause business leaders to hesitate before making their next move.
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