AT&T, Comcast giving $1,000 bonuses to hundreds of thousands of workers after tax bill
Telecom giant AT&T (NYSE:T) was quick to respond to news of U.S. tax reform, announcing it would give some employees bonuses once the legislation is signed into law. AT&T said in a press release Wednesday that it would give more than 200,000 of its U.S. workers who are union members a special bonus of $1,000. The company also increased its capital expenditures budget by $1 billion in the U.S. "Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world," CEO Randall Stephenson said in a statement. "This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees." AT&T had previously said that it would invest $1 billion in the U.S. if "competitive" tax reform legislation was passed, and has said that the tax reform framework could increase demand for AT&T's services. The House of Representatives on Wednesday sent tax reform legislation to President Donald Trump , who is expected to sign it soon. Trump lauded the bill, calling it "an extraordinary victory for American families, workers, and businesses." The new tax law will drop the corporate tax rate to 21 percent from the current 35 percent and includes other measures that Republicans say will spur businesses to invest domestically. AT&T's effective tax rate was 32.7 percent in 2016, according to its annual report. As of the third quarter, AT&T had about $16.5 billion in capital expenditures in 2017. In Wednesday's announcement, AT&T noted its track record of creating U.S. jobs. Earlier this year, thousands of AT&T workers, members of the Communications Workers of America union, went on strike over issues like job security and outsourcing. Many AT&T workers already expected to receive 10 percent raises and $1,000 lump-sum back wages as a result of an agreement announced last week. AT&T told CNBC the bonuses announced on Wednesday are above and beyond any existing agreements, which means some workers would get two $1,000 allocations: One with a new contract, and one when the tax reform bill is signed. AT&T's tax reform announcement comes a month after the Justice Department challenged AT&T's pending merger with Time Warner. Trump has said the deal is " not good for the country " because it might make prices increase. On the other hand, AT&T stands to be a potential beneficiary of another recent move by the Trump administration: the FCC's repeal of net neutrality regulation. The new regulatory landscape will afford AT&T more flexibility to control the pricing and speed of content for its internet customers, although AT&T has said it will not make big changes to the way internet services are delivered. Stephenson is a longtime Republican donor, contributing to candidates, political action committees and the party for at least the last two decades. In 2016, he donated to candidates including Speaker of the House Paul Ryan and Arizona Sen. John McCain. In June of this year, he donated to Trump, presumably for his re-election campaign, and sent almost $34,000 to the Republican National Committee, according to the Center for Responsive Politics. Later in the day, cable and media company Comcast (CMCSA) made a similar move: it announced it would give special $1,000 bonuses "[b]ased on the passage of tax reform and the FCC's action on broadband." Those bonuses would apply to more than 100,000 employees that are eligible and not in executive roles. The company also made a big spending commitment to bolster its broadband plants, television and film production, and theme parks, pledging an outlay of at least $50 billion over the next five years. — CNBC's Sara Salinas and Jacob Pramuk contributed to this report. Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.
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