The tax bill has been passed by Congress? What does this mean? For most Americans, it’s a time to party. This is because we are getting one of the largest tax cuts in decades. Although it sounds big, the actual effects might not be as big, at least at first.
Americans will begin seeing the effects of the tax cut in February. At the end of the year, it will feel like a 1-2% pay increased. That’s better than nothing! The bigger deal is that companies will pay less in taxes. That means a lot. Companies will do many things with this extra money.
Not every company will do the same thing. Some companies will invest in their own interests, such as research and development. Some will buy back their stock, raising the stock price for shareholders, like me. Anyone who invests in a 401k or an IRA (Individual Retirement Account) will benefit from this tax bill. Everyone, every American, should be investing for their retirement. That is unless they plan on working at age 100.
Some companies will give their employees bonuses and raises. What happened to the bonus? Bonuses, not only for executives, used to be more widespread. That might be coming back. AT&T, Comcast, and other companies announced a $1,000 special bonus for all of their employees. That’s huge! And good for them. I’m sure they deserve it. Along with that bonus, companies may begin to grant higher wage increases. This tax bill might, therefore, create better competition between companies. If Company A offers $50,000 a year for a position, and Company B offers $55,000 a year for the same position, which company will the prospective employee want to work at?
The main goal of the tax bill is to grow the economy. All signs are pointing to an energized economy. We’ll have to wait a few years to judge the effects of this tax bill. But I hope it’s good!