WASHINGTON ― Almost immediately after Congress passed legislation that will slash the corporate tax rate, AT&T announced that it would give a $1,000 bonus to 200,000 of its workers. That’s very nice for those workers.
It’s also a very convenient public relations move by AT&T, which is trying to buy Time Warner over the objections of the U.S. Department of Justice.
The Justice Department’s antitrust division filed a lawsuit on Nov. 20 to block AT&T’s $85 billion purchase of Time Warner. The federal lawyers argue that the vertical integration of one of the nation’s largest telecommunications firms with one of the nation’s largest media firms would limit competition and “greatly harm American consumers.”
Presumably with no thought of that legal struggle, AT&T CEO Randall Stephenson praised the president for making the $200 million in bonuses for his company’s employees possible. “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,” Stephenson said in a statement.
President Donald Trump, in turn, praised AT&T. At a Rose Garden celebration after Congress finally passed the bill that will lower the corporate tax rate from 35 percent to 21 percent, Trump pointed to AT&T’s just-announced bonuses and said, “That’s because of what we did. So that’s pretty good. That’s pretty good.”
Trump’s previous statements about AT&T haven’t sounded nearly as friendly, specifically his comments opposing the attempted purchase of Time Warner.
“I’ve always felt that that was a deal that’s not good for the country. I think your pricing is going to go up,” the president said after the Justice Department filed suit against the merger. He added, “But I’m not going to get involved. It’s litigation.”
The $200 million cost of providing $1,000 bonuses to so many AT&T employees is actually a drop in the bucket for a company that saw pre-tax operating income of $6.4 billion in just the third quarter of 2017. The money will surely be welcomed by workers, though they might not see much of it initially. Taxes on employee bonuses are often withheld at a 25 percent rate, which is higher than for most ordinary income. Depending on what tax bracket an employee falls into, they might get some of that extra money back after they file their taxes. Additionally, AT&T had already agreed in a union negotiation to provide $1,000 lump sum payments to 20,000 workers if they approve a new contract by Jan. 12.
AT&T, which did not immediately respond to a request for comment, was a major lobbying force in support of the tax legislation. It joined more than 30 other corporations ― including Aetna, Altria, Boeing, Ford, General Dynamics, Reynolds American and Verizon (which owns HuffPost) ― in the RATE Coalition, an astroturf lobbying group that has pushed for a corporate tax cut for years. It ran television ads in 2016 and purchased social media ads promoting the bill in recent weeks.
CORRECTION: A previous version of this story indicated employee bonuses are taxed at a 25 percent rate. While many companies withhold taxes on bonuses at a 25 percent rate, the supplemental income is included with regular earnings and taxed at the same rate when employees file their taxes.