Several U.S. companies announced new investment and compensation plans after Congress approved a bill on December 20 that would cut the headline corporation tax rate from 35 percent to 21 percent. The legislation, which is now on the move to the President's desk to be signed into law, represents the largest one-time tax reduction in US history, cutting an estimated $1.46 trillion in overall tax collections by the government.
AT&T at the same time confirmed it will invest $1 billion more in USA operations in 2018.
AT&T stock was up by 1.22 percent, to $39.02 on the day; Fifth Third stock was up by 1.34 percent, to $30.92 on the day; Comcast was up by 2.48 percent to $40.36; and Boeing was up by 0.36 percent, to $296.84.
House Speaker Paul Ryan, R-Wisconsin, touted the tax cut legislation resulting in "new investments into the USA economy" as "great news". President Donald Trump is widely expected to sign the bill, giving him and the Republican party a major legislative victory.
Wells Fargo was one of a number of companies that released statements on Wednesday that linked increased pay or bonuses to employees to the tax bill.
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The news is the first sign that many in the middle-class will benefit financially from their employers paying less in taxes.
The tax overhaul permanently reduces the corporate tax rate to 21 percent from 35 percent, while also moving to a system that would exclude many foreign profits from taxation.
"We want to invest in our most important asset - our people", said Fifth Third CEO Greg Carmichael. Wells Fargo said it will boost its minimum wage to $15 an hour, as well as donate $400 million to nonprofit and community organizations. The pay raise will go into effect in March 2018, the company said. Boeing Co., meanwhile, said it would make $300 million of investments as a result of the tax plan, split three ways between employee-gift match programs and charitable donations, workforce development and facilities enhancements.
With these investments, the company expects to add thousands of new direct and indirect jobs.
AT&T CEO Randall Stephenson said in a phone call with the head of the union that company couldn't do the $4,000 raise but was considering a $1,000 bonus to union and non-union employees, company spokesman Larry Solomon said. The company, which also owns NBCUniversal, said it also expects to spend more than $50 billion over the next five years investing in infrastructure to improve and extend broadband plant and capacity, and its television, film and theme park offerings.