As news trickles in from around the country, the GOP tax cut has resulted in some positive optics for proponents of the plan. Walmart employees with 20 years of experience will receive a $1,000 bonus. AT&T also plans to hand out $1,000 bonuses. Still more companies announced bonus plans, raises and new jobs, so it's hard to argue, thus far, that the tax cuts have been bad for America.
Even the, ahem, president was out stumping, this time talking about how the tax cuts have breathed new life into the American economy. Standing before a employees of Sheffer Corporation, a manufacturer outside Cincinnati, OH, he declared “Your paychecks are going way up.” He was right, for once, since Sheffer awarded each of its 126 employees a one-time bonus of $1,000 following the passage of the tax cut.
News like that means Democrats are going to have a hard time navigating this tightrope. Raises and bonuses can't be spun as a bad thing, at least not in an obvious way. But there is a way that the Democrats can acknowledge something good, while still calling out the GOP on their Donor Relief Act of 2017.
For our argument here, let's say that Sheffer Corporation earns about $25 million per year. At the old corporate tax rate of 35%, that would mean Sheffer would end up with a tax bill of around $8.75 million. But thanks to GOP's corporate giveaway plan, Sheffer would be taxed at 21% on their earnings, leaving them with a new tax bill of only $5.25 million. That's a savings of roughly $3.5 million for tax year 2018.
Compare that giveback with the company's apparent generosity. Sheffer is giving each of their 126 employees $1,000, totaling $126,000 in payouts. Nothing wrong with that. But take the $126,000 that Sheffer gave out and contrast that with the $3.5 million that they just saved. The math says they are passing on to their employees only 3.6% of their total savings. And let's not forget that these bonuses are one-time payouts. Thanks to the GOP, Sheffer gets to save $3.5 million every year after that, too.
Just for laughs, and perspective, let's talk about Walmart. In 2016, Walmart's revenue was $482 billion. Their tax bill next year compared to the old tax plan? They could save around $67 billion thanks to the new corporate tax rate. It's estimated that all the bonus money Walmart is handing out would cost the company around $400 million. For those keeping score, that amounts to slightly more than one half of one percent (0.59%) of Walmart's total savings. Sometimes crumbs, no matter how big they seem, are really just crumbs.
