January 9, 2018

Tax Relief Pays American Workers

Key Takeaways

  • At least 123 companies have announced plans to pay bonuses or raise wages in response to the Tax Cuts and Jobs Act.
  • This includes bonuses of $1,000 or more, raising wages to at least $15 per hour, and increasing contributions to pension plans.
  • This is evidence that a substantial part of the corporate income tax is borne by workers, many of whom are now benefiting directly from the reduced rates.

Almost immediately after Congress passed the Tax Cuts and Jobs Act, American workers at dozens of firms began to see the effects in the form of bonuses and raises. For supporters of tax relief this was good news, though not altogether a surprise. During debate over the law, economists cited research that workers bear most of the burden of the corporate income tax via reduced wages. The remainder is borne by consumers and investors. A significant cut in the corporate rate would provide real benefits to workers.

One study by scholars at the American Enterprise Institute concluded that a 1 percent increase in the corporate tax rate is associated with a 0.5 percent decrease in real wages. A 2007 Treasury Department survey of economic studies found that workers “bear a substantial burden” of the corporate income tax. The Congressional Budget Office concluded in 2006 that workers pay more than 70 percent of the cost of corporate taxes.


Opponents of tax relief countered that a corporate rate cut would help only the wealthy – a claim being knocked down more each day. Minority Leader Chuck Schumer said that “history shows tax cuts like these benefit the wealthy and the powerful to the exclusion of the middle class.” As a wave of companies across the country began announcing bonuses and giving raises to workers, it became clear that tax relief is putting more money in the pockets of the hard-working Americans who Republicans said would win because of the law.

More than 120 Companies Show Tax Cuts Benefit All

The same day the House and Senate passed the bill, December 20, AT&T Inc. issued a press release saying: “Once tax reform is signed into law, AT&T plans to invest an additional $1 billion in the United States in 2018 and pay a special $1,000 bonus to more than 200,000 AT&T U.S. employees — all union-represented, non-management and front-line managers. If the President signs the bill before Christmas, employees will receive the bonus over the holidays.”

So far, at least 123 companies have announced they are giving employees bonuses or otherwise increasing compensation due to the tax cut legislation. Notable examples include:

  • American Airlines, Southwest Airlines, and JetBlue announced $1,000 bonuses for their employees (a total of more than 200,000 people). American’s bonuses will exclude officers; Southwest’s and JetBlue’s include all employees. American said it would pay bonuses “in light of this new tax structure.” JetBlue said that “our Crewmembers should be the first to benefit.” Southwest said it would put the savings from tax relief “to work … to reward our hard-working Employees.”

  • AT&T announced $1,000 bonuses to its 200,000 employees. It also said that it will increase capital expenditures by $1 billion in 2018.

  • Comcast announced a $1,000 bonus for more than 100,000 employees. In addition, it plans to invest $50 billion in its infrastructure in the next five years. Comcast said the bonuses are “[b]ased on the passage of tax reform and the FCC’s action on broadband.”

  • Nationwide Insurance announced a $1,000 bonus for 29,000 employees and increased 401(k) matching. The company told its employees: “The combination of the new tax legislation, including a reduced corporate tax rate, and our associates’ ongoing commitment to our members, community and On Your Side promise are the reasons we’re making this investment that further enhances the already robust benefits we offer to attract and retain the best talent.”

  • PNC Financial Services announced $1,000 bonuses for 47,500 employees as well as $1,500 to be added to existing pension accounts. The company also will raise its base pay rate to $15 per hour. PNC’s CEO said: “The tax reform law creates an opportunity to reward our employees who are working hard each day to serve our customers, build strong relationships in our communities and create long-term value for our shareholders.”

  • U.S. Bank announced a $1,000 bonus for nearly 60,000 employees and enhanced health care offerings in the 2019 enrollment period. It will also raise base pay rate to $15 per hour. The bank said that these decisions were “a result of the tax reform package.”

COMPANIES increasing compensation, so far

1.   AAON 63. INB Bank
2.   AT&T 64. InUnison Inc.
3.   AccuWeather 65. JetBlue
4.   Advance Financial 66. Jordan Winery
5.   Aflac 67. Kansas City Southern
6.   Alaska Air Group 68. Kauai Cattle
7.   American Airlines 69. Melaleuca
8.   American Bank 70. Mid-AM Metal Forming
9.   American Savings Bank 71. Move It Or Lose It Moving
10. Americollect 72. National Bank Holdings Corp.
11. Aquesta Financial Holdings 73. Nationwide Insurance
12. Associated Bank 74. National Guardian
13. Atlas Air Worldwide 75. Navient
14. Ball Ventures 76. Nelnet
15. Bancorp South 77. Nephron Pharmaceuticals
16. Bank of America 78. Northpoint Apartments
17. Bank of Colorado 79. OceanFirst Financial
18. Bank of Hawaii 80. Ohnward Bancshares
19. Bank of the James 81. Old Dominion Freight Line
20. Bank of the Ozarks 82. Pinnacle Bank
21. Berkshire Hills Bancorp 83. Pioneer Credit Recovery
22. BB&T 84. PNC Financial Services
23. Carl Black Automotive Group 85. Regions Financial
24. Central Bancompany, Inc. 86. Renasant Bank
25. Central Pacific Bank 87. Resident Construction
26. Charlie Bravo Aviation 88. Riverbend Communications
27. Charlotte Pipe and Foundry 89. Riverbend Management, Inc.
28. Citizens Financial Group 90. Riverbend Ranch
29. Colling Pest Solutions 91. Riverbend Services
30. Comcast 92. Rush Enterprises
31. Comerica Bank 93. Sheffer Corporation
32. Commerce Bank 94. Sinclair Broadcast Group
33. Community Trust Bancorp 95. Smith Chevrolet
34. Copperleaf Assisted Living 96. Smith Honda
35. Cornerstone Holdings 97. Smith RV
36. Dayton T. Brown Inc. 98. South Point Casino
37. Delaware Supermarkets Inc. 99. Southwest Airlines
38. DePatco, Inc. 100. Steel Design
39. Dime Community Bancshares 101. Stifel Financial Corp.
40. Eagle Ridge Ranch 102. Summit State Bank
41. EastIdahoNews.com 103. SunTrust Banks, Inc.
42. Elite Roofing Systems (Idaho) 104. TCF Financial Corp.
43. Elite Clinical Trials, Inc. 105. The Flood Insurance Agency
44. Emkay, Inc. 106. The Travelers Companies
45. Ennis, Inc. 107. Territorial Savings Bank
46. Express Employment Prof. 108. Texas Capital Bank
47. Fifth Third Bancorp 109. Tokio Marine HCC
48. FirstCapital Bank of Texas 110. Total System Services
49. First Farmers Bank & Trust 111. Turning Point Brands
50. First Financial Northwest, Inc. 112. Unity Bank
51. First Hawaiian Bank 113. U.S. Bancorp
52. First Horizon National Corp. 114. Visa
53. Flemington Car & Truck 115. Washington Federal
54. Fort Ranch 116. Webster Financial
55. Gardner Company 117. Wells Fargo
56. Gate City Bank 118. Western Alliance Bancorp
57. GetFoundFirst.com 119. Western & Southern Financial
58. Great Southern Bancorp 120. Willow Creek Woodworks
59. HarborOne Bank 121. Windsor Federal Savings
60. Hartford Financial Services 122. Yancey Bros.
61. Hawaii National Bank 123. Zions Bancorp
62. IAT Insurance Group

Issue Tag: Taxes