A Few Companies Announce Intentions For Tax Windfall, But Biggest Overseas Cash Hoarders Remain Silent

It has only been one day since the Republican-backed tax bill was passed in both houses of Congress, but we have already heard from a few companies on what their intentions are for their tax windfall once the bill is signed. Wells Fargo and Fifth Third Bancorp have both announced an increase to their pay scales that will make $15 an hour the minimum pay in their companies. I found that interesting since there was a major social movement in the past few years that was trying to force Politicians to boost the national minimum wage to $15 an hour.

Boeing announced that it will earmark $300 million toward workforce-related investments and charitable donations as a result of the tax bill. The company said it would spend $100 million for workforce development, $100 million for ‘workplace of the future’ facilities and $100 million for corporate giving, such as employee gift-match programs. It has also been revealed that the company is in talks with Brazilian aircraft manufacturer Embraer. Whether or not the tax bill had anything to do with these negotiations or not is unclear.

Two companies announced $1,000 bonuses for employees. AT&T said it will be giving 200,000 employees $1,000 bonuses after the tax bill is signed and Comcast announced that it will give more than 100,000 employees a $1,000 bonus. These two are interesting cases as they are two of the biggest beneficiaries of the repeal of net neutrality that was approved by the FCC last week. As two of the biggest internet service providers in the United States, the two companies could use this status to control what customers can and can’t see through their internet service. They could charge extra for faster internet speeds, charge websites like Netflix and YouTube to allow customers access due to the high bandwidth usage of video-oriented content, etc. To have these two companies announce so abruptly seems like a little thank you nod to President Trump.

AT&T also has an additional incentive to get on the good side of the Trump administration as the acquisition of Time Warner by AT&T has been blocked by the Justice Department. By giving the President a talking point right ahead of the celebration speech on Wednesday, AT&T likely earned a few bonus points with the administration.

While these companies only represent a small smattering that have announced any intentions for their tax windfall, I find it curious that none of the major overseas cash hoarders that I wrote about back in October have yet to announce any intentions. Of the 30 companies that mentioned that had the most cash sitting overseas, none of the major ones have said anything yet. The top six on that list were Apple, Microsoft, Cisco, GE, Oracle and Alphabet and none of them have announced any intentions for repatriating cash, increasing capital expenditures, or doling out bonuses to their employees. Those six companies accounted for over $500 billion sitting overseas.

Over the last few days I have heard several analysts and financial reporters mention how it was in the best interest of companies like AT&T, Wells Fargo and Boeing to curry favor with the Trump Administration. There were even comments like, “they were seeking an audience of one”, or “it was more for publicity than anything”. While we should all be hopeful that the tax bill has the intended effect of boosting our economy, we are going to need more companies passing it along to employees and shareholders if it is going to be anywhere near as successful at boosting the economy as Republicans predicted.

While the idea of passing down the windfall to employees and shareholders is premise of trickle-down economics, we are going to need far more companies to participate. While on the surface AT&T’s announcement seems like a huge move, from a percentage standpoint it really isn’t. If they follow through and give 200,000 employees a $1,000 bonus, that is $200 million being doled out. While that is a lot of money, it is only 0.5 percent of the companies last reported current assets.

About Rick Pendergraft

Rick has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick’s analysis process includes fundamental, sentiment and technical analysis. Rick started college as an education major, wanting to teach economics, but eventually changed to majoring in Economics and received a Bachelor of Science in Economics from Wright State University. His desire to inform and educate people is at the heart of his writing.

One comment

  1. Rick this is the biggest piece of crap article of the day. Why don’t you start out and in your first sentence say that you’re anti Trump and anti-republican. That way you can justify how you take something that is so positive to those who receive the benefits of the tax bill, and I’m not talking corporations I’m talking their employees and the new jobs that will be coming, and spin it in a negative. If you have a problem with corporations and foreign governments trying to Curry favor with an Administration let’s go back to Obama, Clinton and the Clinton Foundation. This is an op-ed piece not a news article because it’s just your negative opinion

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