Last month, President Donald Trump secured his biggest legislative win to date – managing to get a major tax reform programme passed into law. The controversial reforms will see big corporations benefiting the most with the tax rate for some of the largest companies in the U.S. falling from 35% to 21% – broadly in line with the rest of the developed according to the Financial Times.
A number of companies, including Wells Fargo and Fifth Third Bancorp, responded to the passing of the legislation with plans to increase employee wages. While others, such as telecoms giant AT&T have decided to pay their workers a one-time bonus of around $1,000.
Yesterday, we learnt that Amercian Airlines and Southwest Airlines – both of whom are set to massively benefit from the Tump Administration’s tax reforms – would be also be paying out one-time bonuses to most of their employees. The two airlines set the figure at $1,000 with the payout due by the end of the first quarter.
On the face of it, this seems like a really big incentive for the two airlines employees. American’s chief executive, Doug Parker said the bonus was in “recognition of our outstanding team members.” Southwest echoed those sentiments, saying the lower tax rate would help “reward our hard-working employees” with the $1,000 payout.
But the Association of Flight Attendants, a body that represents over 50,000 cabin crew at 20 airlines thinks this doesn’t go nearly far enough. Sara Nelson, AFA’s president in a statement: “If the airline is benefiting from the new tax law, workers should share in that gain.”
“The new tax bill, which provides permanent corporate tax cuts while only temporarily reducing individual tax obligations, relies on corporate investment in employees to create a benefit for the American people.”
While AFA is glad its members at both American and Southwest will enjoy the bonus payment, Nelson is calling on airlines to “engage union leaders” to discuss a more long-term investment in staff. Specifically, she wants to see contractural improvements and not just one-time special payments.
That’s not to say AFA doesn’t approve of profit sharing schemes but there’s growing concern the tax reforms will see only temporary reductions in individual tax obligations.
Paul Ryan, the Republican Speaker of the House has claimed families earning the median household income would benefit from a $2,059 tax cut next year but some experts believe any benefits would be wiped out by 2027.
We’re yet to hear from either American or Southwest on whether they intend to give staff a permanent pay rise on the back of these tax reforms.