Rhode Island is benefiting greatly from the Tax Cuts and Jobs Act enacted by congressional Republicans and President Trump:
69,190 Rhode Island households are benefiting from the TCJA’s doubling of the child tax credit.
Every income group received a tax cut. Nationwide, a typical family of four received a $2,000 annual tax cut and a single parent with one child received a $1,300 annual tax cut.
357,710 Rhode Island households are benefiting from the TCJA’s doubling of the standard deduction. Thanks to the tax cuts, nine out of ten households take the standard deduction which provides tax relief and simplifies the tax filing process.
14,840 Rhode Island households are benefiting from the TCJA’s elimination of the Obamacare individual mandate tax. Most households hit with this tax made less than $50,000 per year.
Lower utility bills: As a direct result of the TCJA’s corporate tax rate cut, Rhode Island residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, at least three Rhode Island utilities reduced their customers’ bills (see below).
Thanks to the tax cuts, Rhode Island businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:
CVS Health (Woonsocket, Rhode Island) — Base wage raised to $11 per hour, and other pay ranges adjusted accordingly; company will absorb increased costs of health insurance premiums; creation of new parental leave program:
In a continuing commitment to investing in the growth and success of its employees, CVS Health (NYSE: CVS) today announced three major programs that will enable employees to share in the tax savings created by the U.S. Tax Cuts and Jobs Act. The improvements in employee wages and benefits, which are long-term and sustainable compensation investments, total $425 million annually and create continued growth opportunities for the company and its employees. The programs announced today include the following employee-focused investments:
- CVS Health will increase the starting wage rate for hourly employees to $11 an hour, effective April 2018. As part of this change, the company also plans to adjust pay ranges and rates for many of its retail pharmacy technicians, front store associates and other hourly retail employees later in the year to ensure a competitive compensation structure that supports the company’s plans to evolve its retail stores into a health care destination.
- As part of ensuring access to affordable health care, CVS Health will not increase employee premiums for the 2018-2019 plan year. While medical and prescription costs have increased 5% year-over-year, CVS Health will absorb the entire increase for the 100,000 employees who have elected to enroll in the company-sponsored health plan.
- The company is also creating a new paid parental leave program. Effective April 1, 2018, full-time employees who welcome a new child into their home can take up to four weeks away from work at 100% of their pay to ensure the newest addition to their family gets off to a strong start in life.
“As part of our ongoing commitment to the patients, customers and communities we serve, we said that we would invest our tax savings back into our business, and that’s exactly what we’re doing,” said Larry Merlo, CVS Health president and CEO. “Today, we’re building on the investments we’ve been making in our employees, in their wages, benefits and career development. It’s our employees who drive our performance and we appreciate how hard they work every day to deliver on our purpose of helping people on their path to better health.” — Feb. 8, 2018 CVS Health press release
Newport Craft Brewing & Distilling (Newport, Rhode Island) – Because of the Tax Cuts and Jobs Act, the company was able to buy new equipment and expand:
“The past two years has seen us invest heavily in the business, hiring people, investing in equipment and expanding. That becomes much more difficult when there’s a sudden huge expense,” Brent Ryan, co-founder of Newport Craft Brewing & Distilling, said.
“A lot of brewers and distillers were managing through it before two years ago, gradually growing, and when the tax law passed, they were able to say, ‘Wow, I can invest even more in my business.’ Now, if this doesn’t get passed, you’re looking at having businesses cut back on hiring and investing and growth.” – Dec. 25, 2019, Providence Journal article.
National Grid Rhode Island (Providence, Rhode Island) – The utility is passing along tax savings to customers:
National Grid Rhode Island announced today that it is reducing its electric and gas base distribution rate proposal with the Rhode Island Public Utilities Commission (RIPUC) by more than $25 million. Last November, National Grid had put forth its first proposal since 2012 asking the RIPUC to adjust its base distribution rates for both gas and electric customers. Since that time, National Grid has been assessing how the newly passed federal tax reform legislation that was signed into law in late December could benefit our customers.
“Today’s announcement is a key indicator of how this new tax law can provide real benefits to National Grid’s customer,” said Tim Horan, president and COO of National Grid in Rhode Island. “We are committed to ensuring that the tax savings of the legislation are fully realized and are used to help our customers in their energy bills.” — Jan. 11 2018, National Grid press release
Suez Water (South Kingstown, Rhode Island) – The utility is passing along tax savings to customers:
The Company’s Exhibit 4 (Cagle), Schedule 5C contains detail that shows that the Company originally estimated an amount of $129,640 of federal income tax savings from January 1 through September 30, 2018, its estimated effective date of new rates. The Company has reflected that as part of its proposed TCJA-related Regulatory Liability, which the Company proposes to amortize over 50 years. The Company has thus proposed to reduce rate year income tax expense by $2,593, relating to its proposed 50-year amortization of this component of its TCJA-related Regulatory Liability. – June 8, 2018 Rhode Island Public Utilities Commission document
Interstate Navigation Company (Block Island, Rhode Island) – The utility is passing along tax savings to customers:
The parties also agreed on a method for crediting ratepayers with the tax savings from the reduction to the corporate tax rate. The Settlement Agreement provided for the creation of a new capital reserve account to be used by Interstate for capital projects including fixed asset purchases such as new vessels and/or overhauls of vessels, buildings, ramps, docks, pilings, etc. The initial funding will be $1,519,701 and the account will accrue interest at the Washington Trust Company money market rate. The following conditions will apply: (1) ratepayers will be credited when Interstate excludes the depreciation on the appropriate portion of any asset paid for from the capital reserve account funds; (2) if only a portion of the asset was paid for from the capital reserve account funds, the depreciation will be prorated; (3) any portion of the assets purchased from the capital reserve account funds will be excluded from rate base; and (4) because there will be no book depreciation on assets purchased from the capital reserve account, to account for tax depreciation, a credit will be added at the end of each fiscal year to the capital reserve account to capture the benefit for ratepayers. The credit will reflect the tax savings from the tax depreciation at the 21% corporate tax rate and will be added to the ratepayer’s portion of the earnings in excess of 12% on each year’s Return on Equity report – Rhode Island Public Utilities Commission document
Citizens Financial Group (Providence, Rhode Island) — $1,000 bonuses for 12,500 employees and $10 million for charitable donations
“Corporate tax reform provides us with an opportunity to recognize the role our colleagues have played in delivering better results for customers and shareholders, and to positively impact the communities where we live, work and play,” said Bruce Van Saun, chairman and chief executive officer of Citizens Financial Group. – Citizens Financial Group press release
Waste Management, Inc. (Locations in Cranston, Newport, and Providence) – $2,000 bonuses:
Waste Management, Inc. (NYSE: WM) announced today that, in light of the meaningful contributions of its employees and the new U.S. corporate tax structure, the company will distribute US $2,000 in 2018 to every North American employee non on a bonus or sales incentive plan; that includes hourly and other employees.
“We are about to get a tax benefit as our U.S. corporate tax rate goes from 35 percent to 21 percent. In considering how to best spend that, we wanted to find a way to help grow our economy, which in turn, will help grow our business, and give some of the tax savings back to those hardworking employees who do not get the opportunity to participate in our salaried incentive plans,” said Jim Fish, president and chief executive officer, Waste Management.
“So, we are offering each North American hourly full-time employee and salaried employee who does not participate in any sales incentive or bonus plan during 2018, a cash bonus of US $2,000 to show our appreciation to so many of our valued employees while growing our business and returning a good portion of the tax savings directly to the overall economy,” he continued.
Approximately 34,000 qualified Waste Management employees could receive this special bonus. – Jan. 10, 2018 Waste Management, Inc. press release
Washington Trust Bancorp, Inc. (Westerly, Rhode Island) – $1,000 bonuses for full-time employees and $500 for part-time employees; $1.00 per hour salary increase for employees below a certain compensation level:
Washington Trust Bancorp, Inc. (NASDAQ: WASH), parent of The Washington Trust Company, today announced that as a result of the anticipated reduction in corporate taxes from the Tax Cuts and Jobs Act, the Corporation will invest in its employees with special compensation enhancements implemented in January 2018.
“Recent legislation has provided us with an opportunity to further recognize our employees and the important role they play in delivering excellent results for our customers and shareholders,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.
The Corporation outlined the investment plan as follows:
- We will award a one-time cash bonus of $1,000 to full-time employees and a $500 cash bonus to part-time employees. This award will benefit employees below a certain compensation threshold, covering more than 70 percent of our approximately 600 employees.
- Additionally, we will implement a $1.00 per hour salary increase for employees below a certain compensation level, benefitting almost 40 percent of our workforce.
The special compensation is in addition to any merit increases or incentive bonuses for which they may be otherwise eligible. — Jan. 16 2018, Washington Trust Bancorp, Inc. press release
T.J. Maxx – Stores in Cranston, Newport, Smithfield, Warwick, Westerly, and North Kingstown – Tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and increased charitable donations.
Today, Congress approved legislation representing the first comprehensive tax reform in a generation. The President is expected to sign the bill in the coming days.
Once tax reform is signed into law, AT&T* plans to invest an additional $1 billion in the United States in 2018 and pay a special $1,000 bonus to more than 200,000 AT&T U.S. employees — all union-represented, non-management and front-line managers. If the President signs the bill before Christmas, employees will receive the bonus over the holidays.
“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,” said Randall Stephenson, AT&T chairman and CEO. “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.”
Since 2012, AT&T has invested more in the United States than any other public company. Every $1 billion in capital invested in the telecom industry creates about 7,000 jobs for American workers, research shows. — Dec. 20, 2017 AT&T Inc. press release
CarMax (Cranston, Rhode Island) – $250-$1,500 bonuses depending on length of service:
The nation’s largest retailer of used cars, announced plans to provide one-time bonuses to most hourly and commissioned full-time and part-time associates as a result of the recently passed Tax Cuts and Jobs Act of 2017. Bonus amounts will vary from $200 up to $1,500 based on length of service with the company. – Feb. 23, 2018 EPR Retail News article excerpt
FedEx (Locations in Warwick and Providence) – Accelerated and increased compensation; pension plan contributions:
“FedEx Corporation is announcing three major programs today following the recently enacted U.S. Tax Cuts and Jobs Act:
- Over $200 million in increased compensation, about two-thirds of which will go to hourly team members by advancing 2018 annual pay increases by six months to April 1st from the normal October date. The remainder will fund increases in performance- based incentive plans for salaried personnel.
- A voluntary contribution of $1.5 billion to the FedEx pension plan to ensure it remains one of the best funded retirement programs in the country.
- Investing $1.5 billion to significantly expand the FedEx Express Indianapolis hub over the next seven years. The Memphis SuperHub will also be modernized and enlarged in a major program the details of which will be announced later this spring.
FedEx believes the Tax Cuts and Jobs Act will likely increase GDP and investment in the United States. – Jan. 26, 2018 FedEx press release
McDonald’s (40+ locations in Rhode Island) – Increased tuition investments which will provide educational program access for 400,000 U.S. employees. $2,500 per year (up from $700) for crew working 15 hours a week, $3,000 (up from $1,050) for managers, and more:
McDonald’s Corporation today announced it will allocate $150 million over five years to its global Archways to Opportunity education program. This investment will provide almost 400,000 U.S. restaurant employees with accessibility to the program as the company will also lower eligibility requirements from nine months to 90 days of employment and drop weekly shift minimums from 20 hours to 15 hours. Additionally, McDonald’s will also extend some education benefits to restaurant employees’ family members. These enhancements underscore McDonald’s and its independent franchisees’ commitment to providing jobs that fit around the lives of restaurant employees so they may pursue their education and career ambitions.
The Archways to Opportunity program provides eligible U.S. employees an opportunity to earn a high school diploma, receive upfront college tuition assistance, access free education advising services and learn English as a second language.
“Our commitment to education reinforces our ongoing support of the people who play a crucial role in our journey to build a better McDonald’s,” said Steve Easterbrook, McDonald’s President and CEO. “By offering restaurant employees more opportunities to further their education and pursue their career aspirations, we are helping them find their full potential, whether that’s at McDonald’s or elsewhere.”
Accelerated by changes in the U.S. tax law, McDonald’s increased investment in the Archways to Opportunity Program includes:
- Increased Tuition Investment:
- Crew: Eligible crew will have access to $2,500/year, up from $700/year.
- Managers: Eligible Managers will have access to $3,000/year, up from $1,050.
- Participants have a choice for how they apply this funding – whether it be to a community college, four year university or trade school. There is no lifetime cap on tuition assistance – restaurant employees will be able to pursue their education and career passions at their own pace. The new tuition assistance is effective May 1, 2018 and retroactive to January 1, 2018.
- Lowered Eligibility Requirements: Increase access to the program by lowering eligibility requirements from nine months to 90 days of employment. In addition, dropping from 20 hours minimum to 15 hours minimum (roughly two full time shifts) per week to enable restaurant employees more time to focus on studies.
- Extended Services to Families: Extension of Career Online High School and College Advisory services to restaurant employees’ family members through existing educational partners Cengage and Council for Adult and Experiential Learning (CAEL).
- Additional Resources: Career exploration resources for eligible restaurant employees to be available later this year.
- Creation of an International Education Fund: Grants to provide local initiatives and incentives in global markets to further education advancement programs.
“Since its inception, Archways to Opportunity was meant to match the ambition and drive of restaurant crew with the means and network to help them find success on their own terms,” said David Fairhurst, McDonald’s Chief People Officer. “By tripling tuition assistance, adding education benefits for family members and lowering eligibility requirements to the equivalent of a summer job, we are sending a signal that if you come work at your local McDonald’s, we’ll invest in your future.”
After launching in the U.S. in 2015, Archways to Opportunity has increased access to education for over 24,000 people and awarded over $21 million in high school and college tuition assistance. Graduates have received college degrees in Business Administration, Human Resources, Communications, Accounting, Microbiology and more. – March 29, 2018 McDonald’s Corporation press release excerpt