Mike Godfrey, Tax-News.com, Washington
31 January 2018
One month after the US slashed its corporate tax rate to 21 percent, 287 companies have announced wage hikes or plans to expand their investments in the US, according to Americans for Tax Reform.
Chief among those surfacing in recent days were announcements from The Home Depot, Starbucks, FedEx,
and Exxon Mobil.
The Home Depot has announced plans to provide a new one-time tax reform cash bonus for US hourly associates of up to USD1,000. “This incremental investment in our associates was made possible by the new tax reform bill,” said Chairman and CEO Craig Menear in a January 25 statement. Although the company estimates additional net tax expense of approximately USD150m for the fourth quarter of fiscal 2017, primarily related to taxes on unremitted offshore earnings, it currently estimates that the net impact of tax reform on its 2018 tax provision and cash taxes paid will be beneficial.
Starbucks on January 24 announced a series of perks for employees, including a wage increase for all US hourly and salaried employees and a new employee and family sick time benefit, along with a commitment to create more than 8,000 new retail jobs and 500 manufacturing jobs in 2018. “These offerings will total more than USD250m for more than 150,000 [employees] and are accelerated by recent changes in the US tax law,” said the company on January 24.
FedEx has confirmed plans to invest an additional USD3.2bn, made up of wage increases, bonuses, increased pension fund allocations, and expanded capital investment into the US as a direct result of the Tax Cuts and Jobs Act. Specifically USD200m is to be allocated to increasing employee compensation, a voluntary contribution of USD1.5bn will be made to the FedEx pension plan, and USD1.5bn will be invested in FedEx Express’s Indianapolis hub. “FedEx believes the Tax Cuts and Jobs Act will likely increase GDP and investment in the US,” said the company in a January 26 press release.
Most recently, Exxon Mobil on January 30 announced plans to invest more than USD2bn into terminal and transportation expansion and triple production in the Permian basin (a US shale oil field located across Texas and New Mexico) by 2025. “Recent changes in the US. corporate tax rate create an environment for increased future capital investments,” said the company.
House Ways and Means Chairman Kevin Brady (R-TX) commented last week that economic growth figures for the fourth quarter also look promising, with the tax reforms expected to provide a boost to the economy over the coming year.
“With a new tax code built for growth, I’m confident our economy will continue to improve,” he said in a January 26 statement. “2018 is already off to a promising start. Every day, American businesses big and small are announcing plans to hire more workers, increase paychecks, and invest in our communities.”
The latest figures from the Bureau of Economic Analysis estimate that real GDP increased at an annual rate of 2.6 percent in the fourth quarter of 2017 and by 2.3 percent over the full year.