Major US companies say workers will see some of tax windfall - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Major US companies say workers will see some of tax windfall

Posted: Updated:

WASHINGTON (AP) — AT&T, Comcast, Wells Fargo and Boeing — among other major companies — are trying to build goodwill in the wake of President Donald Trump’s tax cuts by finding ways to pass along some of their likely savings to employees.

But Democratic lawmakers and corporate watchdogs say the move is a public relations stunt that pales in comparison to the profits the companies’ shareholders and executives will reap because of the lower tax rates. The stock market, as well, has risen on the belief the savings will largely go investors, rather than workers.

Trump was quick to celebrate an announcement by Dallas-based AT&T that it would pay a $1,000 bonus to 200,000 workers once the tax bill passed Wednesday is signed into law. His praise came as the Justice Department is suing to block a proposed $85 billion merger between communications company and Time Warner, a deal Trump has objected to as “not good for the country.”

Outside the White House, Republican lawmakers clapped and cheered as Trump highlighted AT&T’s planned bonus payments — a gesture that allows the president to say the $1.5 trillion tax cut will help the middle class, even though multiple analyses show it largely showers benefits on the wealthy and corporations.

“That’s because of what we did,” Trump said of AT&T. “So that’s pretty good. That’s pretty good.”

The president suggested that other companies would be making similar announcements, saying “We’re going to see something that’s very special.”

Comcast said later on Wednesday that it will give $1,000 bonuses to more than 100,000 employees. Wells Fargo said it will boost its minimum wage to $15 an hour, as well as donate $400 million to nonprofit and community organizations. Major government contractor Boeing said it will provide an additional $300 million for job-training, facility upgrades and charitable giving.

A White House official said the companies did not coordinate these announcements with Trumps’ economics team. The official insisted on anonymity to discuss private conversations.

The tax overhaul permanently reduces the corporate tax rate to 21 percent from 35 percent, while also moving to a system that would exclude many foreign profits from taxation.

The stock market has soared in anticipation of the cuts with the expectations that they will lead to higher profits, bigger dividend payments and share buybacks.

Shortly after the company announcements, the office of Senate Minority Leader Chuck Schumer said in a statement that the bonuses and higher minimum wages were “the exception, not the rule, when it comes to the biggest corporations spending their windfall.”

Since the Senate passed their initial tax overhaul, 32 companies have announced share buybacks totaling $83.7 billion, Schumer’s office said.

Matthew Gardner, a senior fellow at the liberal Institute on Taxation and Economic Policy, said companies have been sitting on large cash holdings for years that easily could have gone to workers before the tax cuts. Chicago-based Boeing, for example, had $8.8 billion at the end of 2016.

“If these companies had wanted to make these investments in their workforce, they could have done it before now,” Gardner said. “They’re trying to make an unpopular tax bill a little less unpopular.”

The bill has polled poorly with voters in part because it would appear to help major companies and concentrate much of its tax cuts with the top 5 percent of earners.

Wells Fargo, the San Francisco-based bank, would be a major beneficiary from the lower rates. Analysts at Goldman Sachs estimate that the tax cuts would add $3.7 billion to its annual net income.

In addition to these companies, Cincinnati-based Fifth Third Bancorp said it will pay a $1,000 bonus to more than 13,500 employees, as well as raise the minimum wage for 3,000 of its workers to $15 an hour.

Powered by Frankly
All content © Copyright 2000 - 2018 KFMB-TV. All Rights Reserved.
For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.