While tax cuts for corporations have been criticized in the commercial media and on many social platforms, not everything is bad! Two of Birmingham’s largest employers have announced some form of increased compensation for their employees.
Who’s affected by the tax cuts
The tax changes slash the corporate tax rate from 35 to 21 percent. 21% is lower than the current global rate of about 25%. Critics claim that this will leave our country in greater debt. Meanwhile, supporters claim that tax cuts would spur growth, and that companies currently keep their profits off of American soil which reduces American tax revenue more than any potential cuts. The tax changes will go into effect in the 2018 tax year, so will not be relevant this upcoming tax season.
How they’re responding
Regions Financial Corporation announced yesterday that it would increase its minimum wage to $15/hour, from its current minimum wage of $10.15/hour. The bank plans to complete this wage increase by the end of 2018. The pay increase, according to Regions’ press release, will benefit about a quarter of its employees.
Alongside this wage increase comes a plan to dramatically increase capital expenditures. Regions plans to spend more on equipment and real estate, in order to “support investments in facilities, technology, product innovation, and personalized service to meet customer needs.”
According to Regions Chairman and CEO Grayson Hall, Regions “understand[s] that the growth of our company is based on the economic vitality of the communities where we do business, as well as the work from our team of talented associates who are committed to serving our customers every day.”
BBVA Compass, also headquartered in Birmingham, has announced that it too is considering raises. However, the Birmingham bank has announced no concrete plans yet.
AT&T announced soon after the 2018 tax changes were released that it would give all non-management employees a flat $1000 bonus. According to AT&T’s press release, AT&T Chairman and CEO Randall Stephenson said “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.”
Update: Wal-Mart just announced three larger events nationwide. The first event: the company will soon close 63 Sam’s Club locations. The second event: about a dozen of those locations will turn into warehouses for Wal-Mart’s planned e-commerce expansion. The third event, and the most relevant to this article? Wal-Mart will change their pay scale. The minimum wage at Wal-Mart will soon rise to $11 per hour, from $9 per hour. In addition, the company will distribute bonuses ranging from $200 to $1000. The size of the bonus, according to other reports, is based on how long a worker has been at the company.
These tax cuts are controversial, but given current responses, they may yet have their intended effect on the US economy. Do you know of Birmingham businesses celebrating the cuts in a similar way?