Who can forget all the arguing, debating and hyperbole tossed around by both Republicans and Democrats before the new tax law was passed ahead of the holidays. Numerous analysts said it would lead to Armageddon (to this day, I still don’t know what they meant). The vote was contentious, and no wonder. Both parties knew this would have far-reaching effects.
Once the details of the tax law were distributed, the debate continued. However, it now appears that American businesses see this as a huge opportunity.
The new tax law appears to be a Christmas miracle
When FedEx delivered its earnings report in December, the company announced it would be giving large bonuses to employees, returning more money to shareholders and likely to investing money (in hiring and perhaps higher wages). That announcement broke the dam, and a flood of generosity poured forth from corporate America.
Walmart said it would be giving bonuses and increasing hourly wages. Apple said it would be giving even larger bonuses than anticipated, repatriating cash to the US and investing nearly $350 billion in the US (which, yes, includes hiring). To date, more than 120 companies have announced “tax-related surprises” for employees, shareholders and other stakeholders.
It’s hard not to get excited about these positive developments. The stock market is on board, with the SPX 500 up 4% in January and the Nasdaq up 6% – in just the first three weeks of the new year! The markets often get ahead of the news, and we are likely to see strong economic growth as part of the tax overhaul plan.
But corporations are not the only beneficiaries of the new tax plan. More jobs and possibly higher wages will have positive impacts as well. During the upcoming earnings season, we’ll be listening closely as companies discuss their plans.
On top of that, the fact that Congress was able to pass anything was a surprise. So yes, it does appear that the tax plan was a Christmas miracle.
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