A wave of economic change is rippling through America after Congress narrowly approved a bill that would
slash the corporate tax rate and provide temporary tax-rate cuts.
More than one million Americans have received special bonuses from their employers as a result of The Tax Cuts and Jobs Act, according to Americans for Tax Reform – and many more are following suit, infusing vital capital into the US economy.
AT&T and Comcast were the first to leap to action, giving more than 300,000 of their employees $1,000 bonuses and releasing more than $300 million into the economy. Since then, a number of major banks, airlines and utility companies have followed suit by announcing employee bonuses and pay raises, increases in minimum wages, lower customer pricing and significant capital equipment purchases.
One of the first insurance companies to leverage the economic impact of the tax reform bill was The Flood Insurance Agency (TFIA), a mid-sized MGA with approximately $15 million of revenue, based in Gainesville, FL.
On Tuesday, December 26, TFIA CEO Evan Hecht announced $1,000 bonuses for all 17 full time permanent employees, allowing them to share in the company’s corporate pass through federal income tax savings.
“I’ve been studying business and economics my whole life – and that announcement from AT&T is one of the most significant statements I have seen in my lifetime,” Hecht told Insurance Business. “I immediately told my wife (president of
TFIA) to watch what’s going to happen, and within an hour other companies had started to make the same move.
“I’m passionate about this because it’s an opportunity to strengthen the economy of the US. It’s an exciting and efficient allocation of what is essentially new capital created by the tax reform, and businesses can use this capital creatively to help our country.”
Other insurers to rise to action include
Nationwide Insurance and Aflac.
Nationwide has announced $1,000 bonuses to 29,000 employees and increased 401(k) matching contributions for 33,000 employees, in order to “further enhance the already robust benefits we offer to attract and retain the best talent,” according to a company statement.
Increasing productivity and retaining talent are just two of many benefits the US can gain from this “patriotic” tax cut, according to Hecht. A healthy economy could also help to reduce national debt, boost investment in infrastructure and fund strong national defense, he added.
“My hope is that our insurance industry leads the way with both large public insurance corporations and small insurance agencies announcing their plans for leveraging their tax savings toward a bright American future,” he commented. “I would advise those who are hesitant about joining in, to talk to their tax counsel and get a feel for how much extra capital this tax reform bill could put in their pockets, and then think about how to use that additional capital to leverage their business.
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Small businesses represent almost 75% of all jobs in the US and the new tax laws benefit many those businesses. Their allocation of additional after-tax income could be what causes a wave to turn into a tsunami of economic growth that moves the US to a destiny defined by everyone’s hopes and dreams.”
Has your brokerage or agency decided to distribute tax reform initiated employee bonuses? If so, please get in touch: [email protected]
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