“Don’t cut corporate taxes,” they said. “The riches will only be used for share buybacks and executive perks,” they said. “The workers won’t actually benefit,” they said. It’s already looking like “they” didn’t know what they were talking about.
This week Walmart, the nation’s largest retailer, became the latest major American corporation to celebrate the tax cut by granting its 1.5 million employees a well-deserved raise. Walmart is bumping its starting wage from $10 an hour to $11, which will cost the company $300 million. One-time cash bonuses of up to $1,000 per employee, based on seniority, will cost the company another $400 million. The Arkansas-based company will enhance its benefits package, too, extending maternal and parental benefits, which had previously been available only to salaried employees, to full-time hourly workers.
Walmart is clear about the how, the why and the wherefore. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” the company CEO says. “We are early in the stages of assessing the opportunities.” This suggests more good news to come.
A robust labor market is finally pushing upward pressure on American wages after the pain of stagnation that was the mark of the Obama years. Target, like Walmart, boosted wages late last year to retain cashiers and stockers. Unemployment stands at 4.1 percent — more or less full employment – and it’s clear that the tax cut has introduced an unexpected Era of Good Feelings.
The roll of companies giving workers bonuses reads as if the list was lifted from the Fortune 500: American Airlines, Comcast, JetBlue, AT&T, Bank of America, U.S. Bank, Nationwide Insurance.
The companies have been clear about the link to the new tax law. “The new tax legislation, including a reduced corporate tax rate,” says Nationwide, is “one of the reasons we’re making this investment.” AT&T agrees: “Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” says a spokesman. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”
Other companies, mostly smaller ones, are giving straight raises. Wells Fargo, one of the country’s biggest banks, has, like Walmart and Target, increased its entry-level wage. Visa and Aflac announced they will put more into their workers’ retirement schemes.
President Trump’s tax reform, opposed by every single Democrat in Congress, reduced the corporate rate from 35 percent, one of the highest rates in the world and a rate more appropriate to a failing socialist state, to 21 percent. Democratic opponents of the tax cut sneer that it was a “giveaway” to corporate interests, disguised as a reform. What’s happening now is that these wicked “corporate interests” are “giving it away” to their workers.
It’s true that nothing recedes like success, and there’s more work to do on the tax code. But congressional Republicans, fearful they’ll be running for their lives this autumn, have plenty to boast about in the run-up to November 7 and the midterm congressional elections. They should reprise Ronald Reagan’s famous question in the presidential debates of an earlier election season: “Are you better off than you were two years ago?” For many of them, the answer is obvious.