Jan 03, 2018
Southwest, American Airlines Announce Billion-Dollar Investments, Employee Bonuses in Response to Pro-Growth Tax Reform
Post by Freedom Partners
On December 18th, Senator Chuck Schumer (D-NY) proclaimed that the tax reform plan making its way through Congress will have crippling effects for hardworking taxpayers.
The GOP’s tax bill is a cynical one-two gut punch to the middle class – raise their taxes to pay for corporate tax cuts & then decimate their earned benefits as a kicker.
— Chuck Schumer (@SenSchumer) December 18, 2017
Then, just two days later with the legislation on the verge of becoming law, AT&T and Comcast announced billions in new investment, more jobs and more money for their employees, helping to expand opportunity, drive economic growth and prosperity.
Today, more than a dozen companies have announced similar investments, with the Associated Press reporting that Southwest and American airlines are the latest to join the growing list.
“American and Southwest said Tuesday that they will pay employees bonuses of $1,000 each, a gesture that American said would cost $130 million …”
“[Dallas-based Southwest] will benefit immediately from the lower rate on corporate income in the tax bill that President Donald Trump signed last month …
“… CEO Doug Parker and President Robert Isom said the new tax law will help American in the long run … They said the tax changes will give the company more confidence to invest in planes and facilities and pay the employee bonuses …
“… Southwest also announced that it would exercise options on 40 Boeing 737 jets valued at $4.5 billion while delaying 23 previous orders with a sticker price of $2.1 billion by up to five years …
“… Southwest also said that it will donate an extra $5 million to charities in 2018.”
Billions of Dollars in New Investments and Bonuses for Their Employees; More Take Home Pay and More Jobs
Sinclair Broadcast Group “said Friday it will be giving nearly 9,000 employees a special $1,000 bonus, joining other companies including AT&T and Comcast offering bonuses after Congress passed the tax bill this week.” (Axios)
Bank of America Corp. “is giving $1,000 bonuses tied to the tax-overhaul bill to more than half of its 210,000 employees, making the bank the latest company to announce such a perk since the legislation passed this week.
“By the end of the year, the Charlotte, N.C.-based bank plans to give the one-time bonuses to employees who earn up to $150,000 a year in total compensation, according to an internal memo from Chief Executive Brian Moynihan viewed by The Wall Street Journal. About 145,000 employees will get the perk, the memo said.” (The Wall Street Journal)
AT&T “said in a press release on Wednesday that it would give more than 200,000 U.S. union members a special bonus of $1,000. The company also increased its capital expenditures budget by $1 billion in the U.S.
“‘Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,’ CEO Randall Stephenson said in a statement. ‘This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.’
“AT&T had previously said it would invest $1 billion in the U.S. if ‘competitive’ tax reform legislation was passed. The new tax laws are expected to drop the corporate tax rate to 21 percent from the current 35 percent and includes other measures that Republicans say will spur businesses to invest domestically.” (CNBC)
FedEx CFO Alan Graf said during the company’s earnings call that “If U.S. GDP could increase materially next year as a result of U.S. tax reform – if this occurs we would likely increase capital expenditures and hiring to accommodate the additional volumes triggered from this incremental GDP growth.” (CNBC)
Fifth Third Bancorp “said it will raise the minimum wage for all of its nearly 3,000 hourly employees to $15, and would distribute a one-time bonus of $1,000 for more than 13,500 employees by the end of the year if the bill is signed by Dec. 25.
“‘We want to invest in our most important asset – our people,’ said Fifth Third president and CEO Greg Carmichael. The tax cut, the CEO said, provided an opportunity for the bank to ‘reevaluate its compensation structure and share some of those benefits with its talented and dedicated workforce.’” (USA Today)
Wells Fargo “said it would boost its minimum wage to $15 per hour, an 11% increase from its current hourly rate of $13.50, once the law was passed. The pay raise will go into effect in March 2018, the company said.” (USA Today)
Boeing “said it would move forward with $300 million in investments as a result of the new tax law, including $100 million in employee training and education and $100 million to enhance Boeing facilities as part of its ‘workforce of the future’ initiative.
“‘Each of these investments benefits Boeing’s most important strength – our employees – and reflects the real-time impact and economic benefit of the reforms,’ Boeing CEO Dennis Muilenburg, said in a statement.” (USA Today)
Comcast “said it would award special $1,000 bonuses to more than 100,000 eligible employees. The company, which also owns NBC Universal, said it also expects to spend more than $50 billion over the next five years investing in infrastructure to improve and extend broadband plant and capacity, and its television, film and theme park offerings.
“‘With these investments, we expect to add thousands of new direct and indirect jobs,’ the company said in a media release.” (USA Today)
Gate City Bank, “[i]n response to the GOP tax bill recently passed by Congress … announced plans late last week to reinvest $1.6 million to benefit its employees, customers and the community. Included in its plan is $625,000 in employee bonuses. According to a press release issued by Gate City, each employee will be hand-delivered a $1,000 bonus check on Jan. 15.
“Customers will benefit from the bank’s plan to offer $500,000 in free home appraisals. According to Gate City Bank, an average appraisal is valued at $600 … Gate City Bank also plans to donate $500,000 to the community. This is in addition to the bank’s original commitment of over $1 million.” (INFORUM)
Rush Enterprises of New Braunfels, Texas “is planning to give each of its employees a $1,000 bonus after President Donald Trump signs the tax reform bill into law. The commercial truck dealer said all of its approximately 6,600 U.S. employees will receive the one-time payout — which will cost about $6.6 million.
“‘You’ve got a choice — we could’ve kept it and stuffed it in the company bank account or coffers, or we can share it with the people,’ said Rush Enterprises’ Chief Financial Officer Steven Keller. ‘We chose to share it with the people because it’s the right thing to do.’ Rush Enterprises President and CEO W.M. ‘Rusty’ Rush said in a statement ‘we believe tax reform to be beneficial for Rush Enterprises, our communities and overall economic growth.’” (National Review)
Associated Bank of Wisconsin “said Thursday it will boost its minimum hourly wage to $15 and pay workers a $500 bonus when the recently passed federal tax reform is signed, making it the first major Wisconsin firm to announce it is joining the list of companies saying their employees will directly benefit from the legislation.
“The Green Bay-based bank, the largest financial institution headquartered in the state, said it will raise its minimum wage to $15 an hour from $10 — a 50% boost — and distribute the one-time bonus to all hourly, non-commissioned employees once the tax legislation is signed into law. The company said the moves would affect about 55% of its workers. Associated has about 4,400 employees, with 3,400 of them in Wisconsin.” (National Review)
Melaleuca Inc., an Idaho health care and home products company, “announced Thursday that it will be the latest major business to give its workers bonuses in response to President Donald Trump’s tax cuts. Melaleuca CEO Frank VanderSloot said in a phone interview that his 2,000 workers will get a one-time bonus of $100 for every year they have worked at the company. On average, Melaleuca employees stay at the company eight years – which would result in an $800 bonus. The company also has 147 employees who have worked for VanderSloot for 20 years or more.
“‘We’re going to be able to have quite a few substantial dollars after taxes,’ VanderSloot said. ‘I suspect we’re one of the largest taxpayers in the state, so we’re going to have some more dollars to spread around. That money should go to the people who built the company.’” (National Review)
Royal Hawaiian Heritage Jewelry “has been in business for about 40 years. And owner Jackie Breeden is hoping a sweeping tax overhaul approved by Congress and headed to the president’s desk will help her expand operations beyond her stores at Pearlridge Center and on Bishop Street, and a single neighbor island outlet in Kona.
““I’m from Kauai so I would like to open up a shop back on the island of Kauai and on the west side of Honolulu as well, and be back in Maui. Before we were on all the islands,’ she said.” (National Review)
History proves that bold tax relief will benefit all Americans. Tax cuts under presidents Kennedy, Reagan and Bush resulted in strong economic growth, billions of dollars more in federal revenue, thousands of dollars more in take home pay and millions more jobs Americans deserve. And despite the critics who said otherwise, the Tax Cuts and Jobs Act is already making a real difference for businesses and millions of employees and their families.