With unemployment low and demand for new homes high, a company like Home Depot could be spending most of its surplus billions on raises for workers or the rollout of new stores.
Instead, the world's largest home improvement chain this week announced that it is using $15 billion to buy back shares of its own stock, a move that will reward shareholders including chief executive Craig Menear and other top executives.
Even as lawmakers on Capitol Hill began hammering out the final version of a tax cut designed to give businesses more money to invest, Home Depot's statement was a reminder that corporate America may have other plans for that cash.
Several companies already have indicated that they will use excess funds to pay off debt, increase dividend payments or repurchase their own shares rather than create new jobs or raise wages. On Wall Street, the consensus is that workers will be last in line behind shareholders, creditors and investment bankers when the extra corporate cash is distributed.
"If they've got good growth prospects for something, they're already throwing money at that. I don't think the world changes because of lower taxes," said Tim Ghriskey, who manages $1.5 billion in assets as chief investment officer at Solaris Asset Management. "There's clearly going to be a lot of share buybacks."
Home Depot, which says its plans have nothing to do with the shifting tax landscape, is a special company for the president. The chain's founder, Bernie Marcus, was among President Trump's staunchest supporters during the 2016 campaign, once writing that "the fate of this nation" depended upon his election.
Now, the White House website features a Marcus opinion piece praising the tax cut as "the gift that keeps on giving." As Congress debated the $1.5 trillion Republican tax plan, Home Depot last month issued a statement praising the plan for "improving the competitive position of companies so they can create more jobs."
White House economists have said that more generous tax rules for corporations will lead to an increase in investment, which will in turn trigger more jobs and higher wages. In an October report, the Council of Economic Advisers bemoaned the "disappointing state of capital accumulation" and said underinvestment by big business explains disappointing wage growth in recent years.
Yet business investment by one measure has risen in four of the past five quarters, which economists say is a reminder that such big-ticket spending decisions often turn on more than the tax rate. Some outside experts also are skeptical that the tax changes will make much difference for companies already enjoying near-record corporate profits.
"I don't anticipate much new investment," said economist Dean Baker of the Center for Economic and Policy Research.
To be sure, several corporations, including AT&T and CVS Health, have publicly touted plans to funnel tax savings into new spending on equipment or hiring. The telecom giant has vowed to boost its annual investment next year by $1 billion, about a 4 percent increase from last year's $22 billion total.
Companies choose to buy their own shares, increase the dividend they pay shareholders, or pay off debt when they can't earn a higher return by using the money some other way. With interest rates so low, letting cash sit idle doesn't make sense.
"Companies have had so much cash, they could do 'all of the above.' They're likely to continue to do so," said Edward Yardeni, president and chief investment strategist at Yardeni Research.
Over the past five years, companies in the Standard & Poor's 500-stock index spent $2.6 trillion acquiring their own shares. Information technology companies such as Google's parent company Alphabet led the way with big banks such as Wells Fargo and Citigroup close behind. Dozens of companies so far this year, including marquee names such as Apple, JPMorgan Chase and Boeing, have spent big on their own stock.
As the stock market shattered records this year, the number of companies in the S&P 500 that have repurchased shares fell compared with last year.
With the corporate tax cut nearing final approval, Home Depot is far from alone in its buyback plans. Within hours of the retailer's announcement Wednesday, T-Mobile US disclosed its own $1.5 billion plan to repurchase shares.
Such buybacks often lift stock prices, since they result in the same earnings being divided by a smaller number of shares. In Home Depot's case, that will be good news for shareholders that include top management, a teachers pension plan and mutual funds run by Capital Group, Vanguard and BlackRock.
Home Depot also is increasing its investment, modernizing the front end of its top 40 stores and introducing more automation to its supply chain. Over the next three years, the company plans to spend $8.2 billion on capital improvements compared with more than $27 billion on share buybacks and dividends.
The retailer's announcement, which included no major hiring, was just the latest indication that the $1.5 trillion tax cut may not have the intended effect upon corporate investment and the overall economy.
With extra cash freed up by the corporate tax cuts, buybacks could top the record value of $172 billion set in the third quarter of 2007. Around $129 billion was spent in the most recent three months, according to S&P Dow Jones Indices.
"I definitely think it's going up," said Howard Silverblatt, senior analyst at S&P Dow Jones Indices.
In a July survey of 302 companies, 65 percent said they planned to boost dividend payments, and 46 percent forecast share buybacks. A little more than one-third said they would invest the proceeds in new equipment, according to Bank of America Merrill Lynch.
House and Senate conferees are working to reconcile competing tax cut packages in hopes of sending Trump a final bill before Christmas. The measure would cut the corporate income tax to 20 percent from the current 35 percent and allow companies to bring home roughly $2.6 trillion in cash parked overseas at sharply reduced tax rates.
Home Depot had $4.2 billion deposited in foreign accounts as of January, according to its Securities and Exchange Commission filings.
A spokesman for Home Depot said the tax legislation was not a consideration in the stock buyback or the unveiling of new financial targets for 2020, including a modest increase in capital spending.
"Tax reform benefit is not factored into any of this," Stephen Holmes said.
The disappointing prospects for corporate investment echo prior tax-cutting episodes. In 2004, the U.S. granted companies a one-time opportunity to bring money home and pay a 5.25 percent tax rather than the full 35 percent corporate levy. Almost all of the repatriated funds were distributed to shareholders, according to a 2009 study by economists at Harvard University, the Massachusetts Institute of Technology and the University of Illinois.
"We've been down this road before and come up relatively empty-handed," said Chris Rupkey, chief financial economist for MUFG Union Bank. "You can give these companies more money, but if they don't have any way to invest the money and get the return they want, they're going to return the money to shareholders every single time."