What did corporate America do with its big tax cut? It spent over $800 billion on company shares last year, pushing stock buybacks to their highest level ever.

Close to home, Texas Instruments paid $5.1 billion to repurchase shares in 2018 — twice as much as the year before and more than any Texas company in the S&P 500.

TI’s effective tax rate dropped from 39% in 2017 to 17% last year, thanks to corporate tax cuts approved in late 2017 by Republican lawmakers and President Donald Trump.

The tax measure, which had broad support from American businesses, has been Trump's signature legislative achievement. It prompted several large companies to hand out $1,000 bonuses to workers, and supporters said it would spur business investment, higher wages and a stronger economy.

"We haven't seen the business expansion or increase in U.S. employment that many had hoped for, but companies are a lot more profitable," said Howard Silverblatt, senior analyst for S&P Dow Jones Indices, which tracks buybacks and other metrics for the S&P 500.

For those 500 companies, which account for most of the stock market capitalization, the effective tax rate declined by almost 7 percentage points in 2018, he said. For S&P companies in information technology, including TI, Apple, Oracle and the like, the effective tax rate plunged by over 25 percentage points.

“That difference is pure cash,” Silverblatt said.

For TI, the lower tax rate translated into $1.3 billion in savings, according to TI's 10-K filing, and its free cash flow jumped by a similar amount.

“Our strategy is to return all free cash flow to shareholders,” TI wrote in the 10-K.

That’s been an excellent outcome for owners of the Dallas semiconductor company. Over the past five years, TI’s total return tops 166% — more than twice the total return of the S&P 500 Index.

TI has been crushing it for several years, steadily sharpening its industry focus and boosting efficiency. In the two years before the tax cuts, operating margins topped 35%, making all employees eligible for big profit-sharing checks. Last year, TI's operating profit margin hit 42.5%, according to its proxy statement.

Texas Instruments did not return phone calls and emails to its corporate communications staff.

Even with sky-high margins and profits — and the savings from lower corporate taxes — TI still asked for some big tax breaks from local government.

In April, TI said it would build a $3 billion chip plant in Richardson. To land the deal, Collin County, Plano ISD and Richardson agreed to pony up $375 million in tax breaks, stretching from 10 to 17 years.

The state also threw in $5 million from the Texas Enterprise Fund.

In the U.S., many economic development incentives are going to "mega-deals" that give special breaks to the biggest, most productive companies, said Nathan Jensen, a professor at the University of Texas at Austin. He often criticizes such deals, including the TI plant, arguing that companies would expand without public money.

“Even after a lowering in the corporate tax rate, I don’t see any shift in behavior of these firms,” Jensen wrote in an email. “They are still extracting maximum incentives and politicians are willing to give them out!”

TI told the state that Singapore and New York also offered "significant and competitive" incentives, which is how the economic development game is played.

"We have this system where everyone's competing with tax breaks, and on the whole, it's wasteful and highly regrettable," said Gary Hufbauer, a nonresident fellow at the Peterson Institute for International Economics.

After the corporate tax cuts, business investment rose last year, he said, but it’s not continuing at a robust level. Tariffs and other trade policies are stoking uncertainty and offsetting the positives from the tax cuts, he said.

TI increased spending on capital expenditures by $436 million last year, the biggest spurt since 2010. But it boosted dividends by a greater amount and spent an additional $2.5 billion on stock buybacks.

TI’s research and development spending rose by just $51 million last year. Total 2018 spending was over three times higher on stock buybacks than on R&D.

Many experts doubted that corporate tax cuts would result in big increases in R&D and capital expenses. That's because many companies were already cash-rich. And with low interest rates, they could access cheap debt if they believed an investment was justified, said Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.

“What have we truly seen from the tax cuts? A lot of stock buybacks,” Rosenthal said. “The market is acting efficiently and rationally by taking these surplus profits and sending them to shareholders. It’s a demonstration that companies didn’t really have much use for the money.”

There are costs from cutting the corporate tax rate so sharply. Last year, federal taxes on corporate income fell by nearly $120 billion, a decline of 35%, according to the U.S. Bureau of Economic Analysis. That contributed to a rising deficit, even during a booming economy.

The annual shortfall, which was $442 billion in 2015, approached $800 billion last year. It’s projected to top $1 trillion by 2022.

“We just have a bigger hole to dig ourselves out of,” Rosenthal said.