Since the mid-1980s, U.S. corporate tax cuts have become less expansionary and increasingly associated with rising share buybacks. Using dynamic general equilibrium models with endogenous financial allocations towards corporate investment and buybacks, we show that buybacks render corporate tax cuts less expansionary. Simulations based on the 2017 Tax Cuts and Jobs Act have optimal buyback responses much smaller than those observed. This implies that restricting buybacks enhances corporate tax cut effects. Most of the income increases from corporate tax cuts accrue to shareholders. Whether non-shareholders enjoy higher consumption depends on the financing mechanism.