Huge corporations and banks like AT&T, Wells Fargo, and Comcast have announced their plans to deliver bonuses to non-executive employees in light of a massive tax cut courtesy of the GOP tax bill.
Under the new tax law, corporations will be taxed at a rate of 21 percent instead of 35 percent.
In a report by Americans For Tax Reform, the conservative group claims one million Americans will get “tax reform bonuses.” Roughly 54 companies have announced their plans to deliver bonuses as a result of a lowered corporate tax rate. The White House has relentlessly promoted this list as proof that the tax cut was a success. Press secretary Sarah Huckabee Sanders started off her first press briefing of 2018 by mentioning all the companies planning on raising wages and increasing investments, adding that “workers are the big beneficiaries” of the corporate tax cut.
President Trump also made a show of these tax reform bonuses.
Companies are giving big bonuses to their workers because of the Tax Cut Bill. Really great!
— Donald J. Trump (@realDonaldTrump) January 2, 2018
“Some 40 U.S. companies have responded to President Trump’s tax cut and reform victory in Congress last year by handing out bonuses up to $2,000, increases in 401k matches and spending on charity, a much higher number than previously known.” https://t.co/bmWrwWzxMR
— Donald J. Trump (@realDonaldTrump) January 4, 2018
While the bonuses sound impressive, they’re table scraps compared to the total cost of the corporate tax cut.
The GOP tax bill will cost a total of $1.4 trillion dollars, with the corporate tax cut alone costing a massive one trillion dollars. A ThinkProgress analysis of the Americans for Tax Reform report found that the bonuses total roughly $981 million, only .09 percent of the total cost of the corporate tax cut.
Corporations have been flush with cash for a while now, with Trump himself repeatedly tweeting about how well the stock market is doing. These entities could have doled out bonuses at any time, but chose to wait until the Republicans passed the most sweeping change to the United States tax code in decades as a publicity stunt to make both their companies and the businessman-turned-politician President Trump look better.
Companies like Boeing have business reasons to curry favor with the Trump administration. Boeing announced shortly after the tax bill passed that they plan on using the freed up cash from their tax cut to spend $300 million dollars on charitable donations, workforce expansion, and new facilities. Boeing, incidentally, relies on government contracts for much of its business.
“On behalf of all of our stakeholders, we applaud and thank Congress and the administration for their leadership in seizing this opportunity to unleash economic energy in the United States,” said Boeing CEO Dennis Muilenburg in a statement. “It’s the single-most important thing we can do to drive innovation, support quality jobs and accelerate capital investment in our country.”
AT&T announced 2,000 employees will be receiving bonuses worth $1,000 while increasing their capital expenditures by $1 billion. AT&T has been seeking to acquire Time Warner, for which the Justice Department is suing to block the merger. Trump has previously described the merger as “not good for the country.” AT&T announced their bonuses just before Trump spoke at a White House event celebrating the legislative victories.
AT&T, however, is also in the process of laying off thousands of employees, according to the Communication Workers of America (CWA) union, which represents AT&T workers. CWA filed a lawsuit against the company claiming that some of those layoffs are needless, and that the timing of the terminations — just two weeks before Christmas — represents “an extraordinary act of corporate cruelty.”
Comcast, which promised $1,000 bonuses to 100,000 employees as a result of the tax bill, laid off 500 employees just before Christmas as well.
Some companies had these bonuses and wage raises planned well before the tax bill was passed. Wells Fargo, for instance, announced in late December the bank will raise their minimum wage to $15. Advocates of the tax plan were quick to point out these raises as proof that these corporate tax cuts will help American workers. Wells Fargo CEO Time Sloan later clarified to CNN Money that the wage raises were planned and not tied to the Republican tax bill.
Raising the base wage at Wells Fargo $1.50 to $15 will cost the bank roughly $80 million, a figure dwarfed by its $3.7 billion total savings. A Goldman Sachs report obtained by ThinkProgress found that eight of America’s biggest banks will receive a $15.3 billion windfall next year, ranging from $704 million and $3.7 billion.