It’s been a welcome surprise for workers across Charlotte and elsewhere: Companies are awarding one-time bonuses, and some are boosting wages, in the wake of last month’s passage of a federal tax overhaul.
But not every employee in town is reaping the benefits.
Some of the area’s largest employers haven’t passed the tax cuts on to their rank-and-file, unlike other corporations such as Bank of America, Wells Fargo and American Airlines. Those moves follow President Donald Trump’s signing of legislation that slashes the corporate tax rate – what companies pay on their profits – from 35 percent to 21 percent. It’s the lowest level for the rate in about 80 years.
“We’re still evaluating any impacts of the new tax legislation so we don’t have any specific plans at this time,” Duke Energy spokesman Neil Nissan said, making remarks similar to those from other companies.
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In addition to the Charlotte-based electric utility, Mooresville home-improvement retailer Lowe’s, Charlotte-based Bubble Wrap maker Sealed Air, and Winston-Salem-based hospital system Novant Health also have not announced bonuses or higher wages.
Combined, the firms employ tens of thousands of workers in the Charlotte region.
For its part, Novant pays income taxes on certain revenue and will benefit from the lower tax rate, spokeswoman Jennifer Garber said. However, the private nonprofit will not be announcing any bonuses or wage increases as a result of the bill, she said.
“There are other changes in the bill that will mitigate the benefit of that reduced rate,” she said. “At this point, we have not quantified the impact.”
Rival Carolinas HealthCare System, which operates under a hospital authority structure, expects no change in its tax status from the legislation, spokesman Chris Berger said in a statement. As a hospital authority, the Charlotte-based system is exempt from corporate income taxes anyway, he said.
In a statement, Sealed Air spokeswoman Julianna Jacobson said it will continue to invest in its employees and provide bonuses based on company and individual performance. Lowe’s spokeswoman Jackie Hartzell said the company will continue to invest in areas of its business that will enhance the customer and employee experience.
Meanwhile, other companies have made a point to cite the tax overhaul as they award bonuses and raises.
That was the case when Charlotte-based Bank of America last month announced $1,000 bonuses to more than half its workforce, or roughly 145,000 U.S.-based employees. Wells Fargo also mention the tax legislation when it announced last month an increase in hourly pay for U.S.-based employees, who will be paid a minimum rate of $15 starting in March, up from $13.50 now.
Critics have called such announcements nothing more than publicity stunts, and some experts have said companies will likely spend much of the tax cut proceeds on stock dividends and buying back their own shares, a move that can boost stock prices.
So far, the practice of companies handing out bonuses because of the tax bill has not been widespread, noted Michael Schoonmaker, a principal at accounting firm Ernst & Young, listing a handful of examples like AT&T, Boeing and Comcast. Most companies committed to a $1,000 bonus for the majority of employees, he said, adding that he expects more firms to issue bonuses but does not expect it to become commonplace among employers.
“Companies don’t want to paint themselves in a box,” he said. “Many of our clients are still modeling the impact of tax reform.”
Firms with union employees may be under more pressure than others to share the savings with workers, Schoonmaker said. Such pressure might not have much effect in North Carolina, long known for its low union membership rate.
At some employers, executives are bracing for negative effects to their firms’ finances from the tax overhaul.
That’s the case at Novant, which might face higher borrowing costs as a result of the legislation, said Garber, the Novant spokeswoman.
Of particular concern to Novant: the bill’s repeal of a requirement in the Obama-era Affordable Care Act that many Americans purchase health insurance coverage, also known as the individual mandate, Garber said. That will likely lead to more uninsured patients and more unpaid debts for Novant, she said.
“It’s a lengthy and complex bill, and the impact to the organization at this point is still being evaluated,” she said. “Our initial observations indicate it is a mixed bag.”