On Tax Day, spread facts about tax cut
By Doug Gardner
Sunday, April 15, 2018
Tax Day April 18 offers employers a teachable moment about the Republican tax cut.
According to the tax tables released by the Internal Revenue Service, many employees have been receiving bigger checks since February. Well over 100 companies have announced pay increases and bonuses totaling more than $1 billion.
Sure, most of the tax cut went to share buybacks and dividend increases. Employers should explain how this benefited the 150 million Americans who have money invested in the stock market through pensions, 401(k) plans, IRAs and 529 college education plans.
Even liberal Democrats who hated the tax cut will benefit from this. The tax cuts don’t discriminate along political lines.
In fact, it would be a good idea for employers to explain that not one single Democrat voted for the tax bill. Democrats and much of the media told workers they wouldn't get raises or bonuses.
If you are an employer who raised wages or granted a bonus due to the Republican tax cut, tell your workers why. One Virginia bank with a large presence in this area, handed out bonuses, pay raises and increased vacation time to its workers. This is a great time to explain that worker paychecks got larger, not just yours.
Wal Mart boosted its minimum wage to $11 hourly and is granting $1,000 bonuses to many.
CVS raised hourly employee minimums from $9 to $11 and granted four weeks off with pay as new paid leave for family emergencies. The federal standard is 12 weeks unpaid leave.
Cox Communications gave bonuses of $1,000 to $2,000 to most of its 60,000 employees.
Lowes bonused most of its 260,000 employees. The company also accelerated eligibility for health care to just 30 days on the job.
Starbucks is spending $120 million on wage increases and $100 million on stock grants for rank and file employees. One young barista told me she’d heard about that, “but I don’t really understand it.” This is a missed opportunity for management to explain the value of ownership.
Verizon is giving each employee restricted stock worth $2,600.
Wells Fargo raised its minimum wage to $15 hourly and earmarked $400 million more for philanthropy.
Maybe you installed equipment or bought software to improve your company’s productivity. Tell your workers that the tax bill accelerated write-offs that made this happen. Use your own company as an example instead of talking about economic theory. You have special credibility with your workers, especially young ones who distrust authority. Don’t waste it.
Unfortunately, the same president who pushed the tax reform bill now has launched a tariff war. Explain how these tariffs are a tax on your employees and, maybe, on your business, too.
If you are an employer who did not raise your workers’ pay, you ought to think about doing so. Your workers will wonder what you’re doing with the added profits, since the news media have tried to convince them that you are getting a windfall. I saw one poll where 75 percent of those surveyed thought their taxes would increase.
You could also share estimates from the non-partisan Tax Policy Center that show the new law made our tax regime even more progressive than it was. The top one percent got a nominal cut in taxes owed, but their share of taxes paid will rise from 38 percent to 43.3 percent. The top fifth of households, those earning over $150,000, will see their share of the tax load rise to a stunning 87 percent.
This exercise is not unselfish. One party is entirely responsible for this tax cut.
Encourage your workers to vote for pro-business candidates. Next year a House Speaker Nancy Pelosi, with Chuck Schumer, Elizabeth Warren and Bernie Sanders in the Senate, will guarantee no pro-business legislation for two more years, maybe longer.
The author is past chairman of the board of directors of the Elizabeth City Area Chamber of Commerce. The views expressed are his own.