Shortly after the Tax Cuts and Jobs Act (TCJA) was signed into law on Dec. 22, 2017, the Republican lawmakers who wrote and fast-tracked it into law pointed to the measure's immediate effects.
The most immediate indicator was the many companies that gave their workers year-end bonuses.
Some corporate execs acknowledged that the law, which gives big businesses a dramatic 14 percentage points cut on their tax bills (from a 35 percent to 21 percent rate), played a part in the bonus decision.
But as 2018, the first year that the tax cuts will be in effect, other companies are not so sure how they'll share corporate tax savings with employees. Or whether they'll do so at all.
Benefits get a boost: Since passage of the TCJA, 20 percent of the 300 companies polled by the New York-based executive compensation consulting firm Pearl Meyer said they have provided employees with some enhanced benefits.
More than a third of those who boosted benefits, added that they are considering further changes to their benefits package.
Other employee welfare changes: While the year-end bonuses got a lot of attention, most of the changes — 95 percent — according to the poll, were structural changes to compensation.
Bonuses were handed out by 65 percent of the companies. Most of this added income was in the form of one-time year-end payments of $1,000.
Forty-six percent of employers decided to use their corporate tax savings to raise the minimum wage they pay some of their workers.
Retirement benefits got a bump at 12 percent of the businesses. Another quarter or so of companies is considering making changes here.
Another 15 percent of employers said in the online survey that they considering reducing healthcare costs.
Other actions that companies also have taken in the wake of the corporate tax cut law don't directly affect immediate compensation, but could in the future.
This includes such things as increasing capital investment, bolstering employee training and hiring more workers.
More wait and see: A majority of the polled execs, however, are biding their tax savings time.
More than half of employers, 52 percent, are not planning any immediate changes to their benefits packages.
The reason? They're unsure of just how much the tax changes will mean to their bottom lines.
Others say they are not anticipating significant enough tax benefits to share.
In cases where company brass expects to eventually see tax savings sufficient enough to pass along, things like profit sharing plans and equity awards top the consideration list.
Share info if not the wealth: Regardless of how any tax savings are or aren't used, keeping employees is the loop is imperative.
"Given the recent wave of announcements and news coverage, companies who are not planning to make changes [should] be prepared to answer employee questions by developing a solid communication plan to explain their rationale," said Pearl Meyer.
You also might find these items of interest:
- Bonuses comes with tax baggage
- Is Amazon's second HQ worth the tax incentive price?
- Buffett's Berkshire gets $29 billion boost from GOP tax bill
source http://www.dontmesswithtaxes.com/2018/02/how-companies-are-or-plan-to-share-their-tax-cut-wealth.html
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