Expect a stampede of companies handing out bonuses, raising pay, spending on capital projects and giving to charities, with the windfall from the massive corporate tax cuts passed Wednesday.
In the hours after Congress approved the GOP tax cut plan, a handful of companies jumped to announce plans to share some of the proceeds on their employees and spend on infrastructure. Boeing was first out of the gate, followed by AT&T, which said it would give more than 200,000 unionized employees a special bonus of $1,000 once the tax bill is signed. CNBC reports the company also said it would increase its capital expenditures by $1 billion.
Comcast, which owns CNBC parent NBCUniversal, said it would pay 100,000 frontline and non-executive employees special $1,000 bonuses. The company also said it is making the move because of the FCC’s recent change in broadband rules and tax reform. It also said it plans to spend well in excess of $50 billion over the next five years on infrastructure improvements.
“This is exciting stuff. This is good. This is not just a whole bunch of guys saying I can buy back a lot of stock here and jazz up my numbers through financial engineering. This is a bunch of business leaders saying we can use this tax benefit to grow our company, keep our loyal employees and assist the community,” said Dick Bove, banking analyst at Vertical Group.
“It looks like they are going to use that money to stimulate more employee loyalty by increasing spending. They are also going to get more liberal with their stock programs. They are going to increase philanthropic activity because it’s one of the ways they stimulate business,” he said. “I was convinced they were going to cut prices and go to war with each other, which I’m sure they will still do.”
Bove said the fact companies have immediately given money to workers is a positive surprise, and it could boost the economy if enough do it.