For years, the retail industry called on Congress to pass comprehensive tax reform to jump start the economy, grow wages and advance U.S. competitiveness on the global stage. Fortunately, a more competitive tax code is finally the law of the land, and retailers are beginning to assess what it means for their businesses and ways to incorporate savings.
For the retail industry, which previously paid the highest effective tax rate of any sector of the U.S. economy, the estimated savings amount to $171.4 billion over 10 years. So, how are retailers responding to a fairer tax environment? As NRF has said all along, the lower corporate tax rate will free up money to reinvest in businesses and employees.
It’s only been a few weeks since the new tax law took effect, and we are already seeing those predictions come to fruition. Employers across the country are investing in their workforce because of tax reform, and more than 3 million American workers are receiving special bonuses, higher wages or expanded benefits as a result. Retailers are among those leading the way:
- Walmart announced plans to give a one-time cash bonus of up to $1,000 to eligible associates, increase its starting wage to $11 an hour, expand its parental and maternity leave policy and provide adoption benefits.
Here's how we're sharing our tax savings with our associates: https://t.co/aYKBcwxntM pic.twitter.com/lWUvtFGn9F
— Walmart Newsroom (@WalmartNewsroom) January 11, 2018
- Starbucks is investing $250 million in its employees through higher wages, bonuses of up to $2,000, stock grants and paid leave benefits.
Investing in our partners...a Starbucks tradition. $250 million in wages, stock and benefits—https://t.co/ONLKi0WV6o. pic.twitter.com/DxMFcuJe6S
— Starbucks Coffee (@Starbucks) January 24, 2018
- The Home Depot’s hourly associates will receive a one-time cash bonus of up to $1,000.
Home Depot to pay staff bonus after tax overhaul $HD https://t.co/9QacFlXAJe pic.twitter.com/1D1BGP53qN
— Yahoo Finance (@YahooFinance) January 25, 2018
- AT&T will invest an additional $1 billion in the U.S. in 2018 and pay a special $1,000 bonus to more than 200,000 U.S. employees.
JUST IN: AT&T announces it will "pay a special $1,000 bonus to more than 200,000 AT&T U.S. employees" due to tax reform passage and will also increase US capital spending by $1 billion. https://t.co/jn8limUSe7
— CNBC Now (@CNBCnow) December 20, 2017
- The Walt Disney Company is giving 125,000 employees a $1,000 cash bonus and investing $50 million in a new higher education tuition reimbursement program for hourly workers.
As a result of the recently enacted tax reform, 125,000 Disney employees to receive $1,000 cash bonus and Company launches new $50 million higher education program: https://t.co/79MVup6n3m
— Walt Disney Company (@WaltDisneyCo) January 23, 2018
- Apple is investing $350 billion over the next five years and adding over 20,000 new jobs.
BREAKING: Apple says it will build a second corporate campus, hire 20,000 workers in $350 billion, 5-year commitment to US economy.
— The Associated Press (@AP) January 17, 2018
- Olive Garden and LongHorn Steakhouse parent company Darden Restaurants pledged to spend an additional $20 million on its workforce in 2018.
Olive Garden owner pledges to boost employee perks after tax cut https://t.co/kF9VUUwYtT pic.twitter.com/PDRHb6lZ9B
— Bloomberg Politics (@bpolitics) January 9, 2018
- Verizon employees will receive 50 shares of stock each, amounting to more than $2,600 per worker for a total of $380 million.
Verizon is using some of its tax savings to give each employee 50 shares https://t.co/Xg8P8qjrnw pic.twitter.com/HRT2yZN7rG
— Bloomberg Markets (@markets) January 23, 2018
- Lowe’s will offer a one-time bonus of up to $1,000 for its more than 260,000 hourly employees and expand maternity and parental leave as well as adoption assistance.
Lowe's to pay US staff $1,000 bonus following tax reform https://t.co/DP43FGVMDQ
— FOX Business (@FoxBusiness) February 2, 2018
- More than 100,000 Best Buy employees are receiving bonuses thanks to tax reform. A one-time bonus of $1,000 will be paid to full-time workers and part-time workers will receive $500. The retailer is also investing $20 million in technology training for young people.
Great news for a MN company thanks to #taxreform! All permanent full-time employees receive $1,000 bonus & part-time hourly employees get $500! Best Buy will also make $20M contribution to Best Buy Foundation to provide tech skills training to 1 mil underserved teens every year https://t.co/78FmwwUy53
— Rep. Erik Paulsen (@RepErikPaulsen) February 2, 2018
- Chipotle is using its tax savings to provide qualified employees cash and stock bonuses. The company is also investing in more employee training programs and enhanced parental leave, life insurance and short-term disability coverage.
Chipotle announces bonuses and new employee benefits, citing tax cuts https://t.co/aat1OjJiyR pic.twitter.com/Q0VyQCR9xN
— The Hill (@thehill) February 7, 2018
- CVS Health will increase its starting pay for hourly employees to $11 per hour, offer full-time employees as much as four weeks of paid parental leave and keep a lid on worker health-care premiums because of tax reform.
Q4 Earnings: We are revising 2018 guidance to reflect the effects of tax reform https://t.co/PM8fHtw9g3 pic.twitter.com/3iUGRAxg32
— CVS Health (@CVSHealth) February 8, 2018
- McDonald’s will invest an additional $150 million over the next five years into its Archway to Opportunity program due in part to tax reform. By tripling this investment and expanding eligibility for the program, 400,000 employees will have the opportunity to further their education.
.@McDonalds expanding education benefits program, citing new US tax law and tightening job market. @josephpisani reports https://t.co/5kEjn4HnHU
— AP Business News (@APBusiness) March 29, 2018
- Kroger is using its tax savings to offer employees up to $3,500 annually toward continuing education and development opportunities, raise starting and overall wages for store associates and increase the company match in the 401(k) plan.
Kroger’s CEO and Chairman Rodney McMullen introduces new Feed Your Future education assistance program, a benefit of tax reform, for company’s 453,000 associates. pic.twitter.com/qE5Zu2glrH
— Kroger News (@KrogerNews) April 16, 2018
- Costco announced it will invest savings from the tax cuts into employee wages, raising its minimum wage and boosting pay for 130,000 U.S. employees.
Costco raising minimum wage to $14 an hour https://t.co/54AceS2D1I pic.twitter.com/aukUPU6egG
— The Hill (@thehill) June 1, 2018
This recent news only scratches the surface of the benefits we’ll see from tax reform as it ripples through the economy. As a diverse industry, retailers will react in a variety of ways with no one-size-fits-all response. To adapt to ecommerce and meet the need of their customers, many retailers will use their tax savings to invest in technology and innovation and expand their online footprint. In return, those investments will create stronger retail companies, more jobs and higher wages.
As employers identify ways to reinvest in their businesses and workforce, middle-class consumers — retail customers — will also soon see bigger paychecks because of tax reform. In fact, the average family of four earning $73,000 a year will receive an estimated annual tax cut of more than $2,000.
The bottom line is that tax reform will go a long way in boosting the economy and creating more opportunities for America’s workers, and this is just the beginning.