A Texas-based chain of strip clubs would go on a buying spree. A growing technology company would move fewer jobs overseas. And a regional bank would boost its spending on cybersecurity.
These are some of the uses of the tax savings that small and medium-sized U.S. companies say they would pursue if the Trump administration and the Republican-controlled Congress slashed corporate taxes as promised.
Small companies pay the highest taxes and they would be the main beneficiaries of such a Trump windfall. Reuters contacted the 100 largest companies by market value in the benchmark Russell 2000 index of U.S. small and mid-cap stocks, as well as another 50 in the Russell 2000 with no analyst coverage. None of the 17 companies that responded to Reuters queries mentioned boosting their headcount.
The administration has said the tax cuts would largely pay for themselves by spurring more investment and creating jobs.
But companies say they look to spend on technology that will allow them to improve productivity or make acquisitions rather than hire more workers.
"We want to be a company of the future, and technology is one of the key ingredients," said Keith Cargill, chief executive at Dallas-based Texas Capital Bancshares, a bank with a market value of $4.2 billion. The tax cut would be a "huge plus" for earnings, Cargill said, but with little impact on the bank's workforce.
The Russell 2000 companies tend to pay the highest effective tax rates now — an average of 31.9 percent, according to Thomson Reuters data — and would stand to gain the most if corporate taxes are cut to 20 percent from 35 percent as the Trump administration has proposed.
For large companies in the S&P 500, the average effective tax rate is 28 percent, a reflection of a greater share of overseas business and more leeway in reducing their tax rates.
While few companies would discuss any details in public before outlining them to their shareholders, executives, chief financial officers, and treasurers say they are already starting to formulate plans for a tax windfall even if they are not certain whether and in what form it will pass.
Neil Hennessy, the chief executive of Novato, California-based Hennessy Advisors, a mutual fund company, told Reuters he was in "acquisition mode" and would keep looking for targets in the event of a tax cut passing.