News Round Up 2018

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Lee Matthews said:
That will keep them happy about pay for a while before they start moaning again.
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rteetz said:
Well they are still in contract negotiations so I would imagine this won't do a whole lot until that is over.
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The company I work for did the same thing. Everyone making under a certain amount of money and was in "good standing" (certain level of performance reviews, not on probation, etc), got $1,000 bonus.

I'm not going to turn my nose at any type of additional compensation, but I also realize that the company will be saving money for the next however many years, while this additional compensation is a one time special thing.
 
Hmmm, a $1,000 bonus isn't anything to sneeze at. Its about equal to a 50 cent/hour pay increase for those that work 40 hour weeks.
 
OKW Lover said:
Hmmm, a $1,000 bonus isn't anything to sneeze at. Its about equal to a 50 cent/hour pay increase for those that work 40 hour weeks.
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No. It's not something to sneeze at. I'm sure it is quite welcome by the recipients. But it's important to remember it is about equal to a 50cent/hour pay increase for 1 year only. It is not a raise, will not factor into cost of living or percentage raises in the future, and will be taxed at a higher level. The companies will enjoy the benefit of lower taxes for the foreseeable future. Employees are most likely seeing their single benefit now. While that benefit is nice, as you said and I agree, perspective is important that the companies get a long term benefit, employees a short term one.
 
It's money you were not expecting, so of course it's welcome. As pointed out, it's taxed different and it's not reoccurring, which is a bummer, but it's still a nice perk. No doubt there are some folks that might have over done it with holiday spending, and this will help cover that.

I understand why you wouldn't tax a bonus at a lower rate than base pay, but it does strike me as odd to not tax it at the same rate as normal income.
 
sachilles said:
It's money you were not expecting, so of course it's welcome. As pointed out, it's taxed different and it's not reoccurring, which is a bummer, but it's still a nice perk. No doubt there are some folks that might have over done it with holiday spending, and this will help cover that.

I understand why you wouldn't tax a bonus at a lower rate than base pay, but it does strike me as odd to not tax it at the same rate as normal income.
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You'd have to dig into the tax law but it's probably because many people, especially in sales positions, are paid in bonuses. If you tax at the higher rate, as the government, you get a nice interest free loan until tax time rolls around and you issue a refund. Plus it prevents people from having huge tax bills, which is a significant cause of non-payment. Since you don't know what your annual bonus, or the sum of your bonuses might be, it is difficult to pay at the proper level throughout the year. Overpayment up front solves these problems.

As someone with a large bonus component to my pay, I both understand and lament the loan I'm forced to give our government.
 
It's also relevant that some of the benefits to companies are one-time as well, as I understand it, like repatriation and full expensing of various capital expenditures. Makes sense to match the timing when paying out -- i.e. short-term income with short-term expense (bonus).

The lower corporate tax rate is the piece that lives on. I don't think it makes sense to expect businesses to pass the tax rate cut directly on to employees in perpetuity -- the idea is that this makes American businesses more competitive internationally (basically, right?). That should theoretically have multiple benefits over the longer term, some of which would presumably be passed directly & indirectly to employees.

To state the obvious, there was no requirement that any company pass ANY of the short or long term bottom line savings to employees. It's smart to (employee satisfaction, PR, etc.), but not required. I think most would admit that the amount being passed on to employees by US companies so far surpasses expectations. We don't have to be unhappy about everything, do we? :)

ETA: this obviously doesn’t include the fact that several nonpartisan groups project high percentages of Americans (though not all, obviously) will see a personal income tax cut in addition to anything their company decides to “share” with them. Wish that was longer-term than it is — will come up for renewal down the line, but there’d be obvious pressure to renew if enough people really do feel a cut. I’m a realist — some say pessimist ;) — but I can see plenty of reasons not to be down on short-term bonuses or this bigger picture right now.

With that, I return to your regularly scheduled “News Round Up” programming. :)
 
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