President Donald Trump hasn't yet signed the tax overhaul that promises to slash corporate taxes, but several big U.S. companies raced Wednesday to tout plans to dole out some of the expected windfall.
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AT&T Inc. and Comcast Corp. said they would pay a $1,000 bonus to most of their U.S. workers -- more than 300,000 people combined -- once the president signs the legislation. Wells Fargo & Co. and Fifth Third Bancorp said they would raise their minimum wage to $15 an hour.
The moves came within hours of a final vote in the House to adopt the legislation, which would reduce the corporate tax rate to 21% from 35% and make other sweeping changes expected to cost $1.5 trillion over the next decade. The Senate passed the bill a day earlier, and Mr. Trump is expected to sign it, though perhaps not until early January.
Telecoms and banks are among those expected to get a huge boost from the overhaul since most of their operations are domestic and they pay higher effective rates than internet or pharmaceutical firms that have intellectual property or operations outside the country.
In a statement, AT&T CEO Randall Stephenson was effusive in his praise for the bill, saying Congress and Mr. Trump "took a monumental step" to align U.S. taxes with those of other industrialized countries.
A few weeks ago, Mr. Stephenson was sparring with the Trump administration after the Justice Department filed an antitrust lawsuit to block AT&T's takeover of Time Warner Inc. He broached the question of whether the White House meddled in the process and said he didn't know the answer. The Justice Department said there was no political interference.
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Mr. Trump, in celebrating the bill's passage in Congress in a White House event, highlighted AT&T's pledge to give bonuses and increase spending. "That's because of what we did, so that's pretty good," he said.
The mutual admiration comes after a year in which the relationship between the White House and U.S. business leaders has often proved tumultuous. Two CEO advisory panels disbanded earlier this year after members began announcing they would leave the bodies in protest of Mr. Trump's response to a white supremacist march that turned deadly in Charlottesville, Va.
But American companies stand to benefit from the Republican tax overhaul as well as extensive efforts to cut back regulations across industries -- initiatives that executives have sought to support even as they sometimes kept their distance from the president in public.
In announcing its bonus, Comcast cited both the tax cut and the Federal Communications Commission's recent decision to roll back net neutrality regulations.
Economists and some policy makers have questioned the degree to which companies will use the savings from the tax bill to invest in the U.S. or create jobs, as opposed to buying back shares or paying dividends to shareholders.
Congressional Democrats are highlighting the risk that companies don't ramp up hiring and investment. Sen. Chuck Schumer (D., N.Y.) circulated a list of more than 30 large public companies that have announced a combined $83.7 billion in share buybacks since the Senate passed its version of the tax overhaul in early December.
"There is a reason so few executives have said the tax bill will lead to more jobs, investments and higher wages," Mr. Schumer's communications director, Matt House, wrote in an email to reporters. "It will actually lead to share buybacks, corporate bonuses and dividends."
Companies discussing their buybacks in conference calls during this period didn't tie the announcements to the tax bill. Some, including Honeywell International Inc., explicitly said they hadn't determined how they would use foreign assets once they had paid a one-time tax. Through Sept. 30, share buybacks have generally been declining among S&P 500 companies since about mid-2016.
On Wednesday, AT&T said it would pay its special bonus to more than 200,000 union and nonunion employees and front-line managers.
The Communications Workers of America union recognized the payouts, though it has also attacked the GOP bill as skewed toward corporate interests and the wealthy. Labor groups have asked corporations, including AT&T, to give employees a $4,000 wage increase once the tax cuts pass, citing an amount the Trump administration has said would flow to workers.
"While I'm never going to turn down money for our members, $1,000 is a drop in the bucket," compared with companies' benefit from the tax plan, CWA President Chris Shelton said in an interview. "We won't rest until we get at least what they promised."
CWA has backed the AT&T takeover of Time Warner and recently reached a tentative labor agreement boosting pay and job protections for about 21,000 of its wireless workers. Those employees would get an extra $1,000 ratification bonus if they approve the new contract.
Boeing Co., another firm expecting a big reduction in its tax bill, said Wednesday it will inject $300 million of its savings into employee-related activities, split equally between training, facilities upgrades and supporting charitable gift-match programs.
Wells Fargo plans to increase its minimum hourly wage to $15 from $13.50, a move that will affect 36,000 workers. In addition to raising its minimum wage for 3,000 workers, Fifth Third said it would give more than 13,500 of its 18,000 employees a one-time $1,000 bonus.
Fifth Third finance chief Tayfun Tuzun said in early December that he expected the bank's effective tax rate would fall from about 26% or 27% to 12.5% or 13.5%. He also estimated that the bank would have a net gain of $240 million to $265 million. At the time, he expected the majority of the bank's tax benefit to go to the bottom line. The bank said on Wednesday the pay raises would cost $23.6 million.
--Drew FitzGerald, Rachel Louise Ensign and Christina Rexrode contributed to this article.
(END) Dow Jones Newswires
December 20, 2017 19:41 ET (00:41 GMT)