The Tax Cut and Jobs Act helped power the biggest U.S. banks to record profits for the second straight year.Why it matters: The tax cut was sold as a way to revitalize hiring and spending by American companies to boost the economy and help struggling workers, but the windfall is largely staying with banks and their shareholders.But rather than use the money to hire a bonanza of workers or invest in big new capital projects or equipment, the banks used it largely to buy back stock and pad their balance sheets, data analysis from Bloomberg shows.By the numbers: JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley announced earnings this week showing they saved $18 billion in 2019, and their average effective tax rate fell to 18% from 20%.Banks had previously paid effective tax rates of around 30%, Bloomberg found.The tax savings helped the six firms post $120 billion in net income for 2019, slightly higher than the previous record for profits set in 2018.Until the tax cuts, the six banks had never surpassed $100 billion.The big banks so far have reported stellar earnings from Q4, with the exception of Wells Fargo.Wells Fargo faced a series of scandals and set aside $1.5 billion for legal costs during the year, but still managed to save $3.3 billion on its tax bill last year.The intrigue: The big banks have actually shed jobs since passage of the tax cut law, collectively reducing their workforce by 1,200 people since 2017, Bloomberg reported."To be sure, hiring and firing was mixed among the six lenders, and some raised base pay or enacted special bonuses. Some also updated investors this week on investments in technology to automate jobs.""Shareholders were big beneficiaries. After banks cleared the Federal Reserve’s mid-year stress tests, the group announced plans to boost stockholder payouts by $21.5 billion, an increase of 14%."Of note: Banks weren't supposed to deliver such strong earnings in 2019. Last year's earnings growth was measured against 2018 when the lower tax rate had already taken effect, unlike in 2018 when comparisons were to 2017 when tax rates were 35%.Go deeper: U.S. shadow banking sector may have grown to $1.2 trillion