AT&T, Comcast Pledge Tax Savings Windfall Will Go Toward Network Investments, Employee Bonuses

Just in time for the holidays, AT&T and Comcast are promising employee bonuses and laying out substantial business investment plans in the wake of the passage of tax reform.

The Tax Cuts and Jobs Act was passed by Congress this week. The legislation, which is now on the move to the President's desk to be signed into law, represents the largest one-time tax reduction in U.S. history, cutting an estimated $1.46 trillion in overall tax collections by the government. Specifically, the GOP Act will cut the corporate tax rate from 35 percent to 21 percent.

The telecom giants have said that tax reform, coupled with the Federal Communications Commission's repeal of the Net Neutrality regulations last week, will make room for additional investments on employees, as well as network infrastructure and next-generation technologies, such as 5G.

[Related: 6 Things Partners Need To Know About The Tax Cuts And Jobs Act]

AT&T said in a statement that once the Act is signed into law, it plans to invest an additional $1 billion in the United States during 2018. The Dallas-based carrier will also pay a $1,000 bonus to more than 200,000 U.S.-based employees who are union-represented, non-management, and front-line managers. Moreover, AT&T promised that if the President signs the bill before Christmas, employees will receive their bonus over the holidays.

’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,’ Randall Stephenson, AT&T's chairman and CEO, said in the statement.

For its part, Comcast said it would also dole out "special" $1,000 holiday bonuses to more than 100,000 "frontline and non-executive" employees. The Philadelphia-based cable behemoth also plans on spending "well in excess of $50 billion over the next five years" on infrastructure to improve and extend its broadband plant and capacity, as well as on its television, film and theme park offerings, Comcast said.

"With these investments, we expect to add thousands of new direct and indirect jobs," Comcast's chairman and CEO Brian Roberts said in the company's statement.

AT&T could not be reached for further comment on the potential impact of tax reform before publication, and Comcast pointed CRN to its public statement.

In addition to helping larger corporations, the Act will reduce the business income tax rate by 20 percent for smaller "pass-through" companies that run as partnerships, LLCs and S-corporations, which include the majority of solution provider organizations.

Alan Weinberger, a lawyer, and chairman and CEO of The ASCII Group, an organization that provides business-building tools to 1,500 VAR and MSP partners throughout North America, said that the freshly-passed Act will most likely trigger the most business investment and job creation within smaller businesses.

The same may not be true for larger corporations Weinberger, along with many economists, have argued.

"Corporations will most likely look at this windfall to buy back stock or make capital improvements, but not necessarily build employment," he said. "By having higher earnings, stock prices will go up and [corporations] will pay more dividends, so [tax reform] could help stockholders, not necessarily employees of big companies."

However, several corporations in addition to AT&T and Comcast, including Boeing, and Wells Fargo, have already announced plans to use the steep tax savings on employee trainings, raises, and bonuses, or to upgrade their facilities or invest in new technologies to give their companies a more competitive edge.