You get a raise! And you get a raise! And you get a raise! Sorry, you can’t blame me for channeling Oprah as the list of companies increasing employee salaries and bonuses continues to grow thanks to the new tax reform laws. Not only will the average American family receive a “$4,000 raise” under the new tax plan, but many of those employees will see their income grow even further thanks to the law’s corporate tax cuts.
It appears that what’s good for the goose is good for the gander. U.S.-based companies are feeling pretty generous now that the corporate tax rate has gone from 35 percent to 21 percent. Some companies, such as Starbucks, JetBlue, Comcast, AT&T, Walt Disney Co., Southwest Airlines and Travelers, are granting $1,000 one-time bonuses to employees. Fiat Chrysler employees are even set to receive $2,000 bonuses! Apple is also doling out $2,500 worth of restricted stock units to the majority of its non-executive crop.
If that’s not enough good news, perhaps this will wet your whistle. The corporate tax cut has also inspired many companies to raise their minimum wage. Wal-Mart is raising its minimum hourly wage to $11 an hour as health insurer Humana goes to $15. Aflac, Visa and Nationwide are also increasing matching contributions to employees’ 401(k) retirement plans.
The $4,000 tax savings, plus a wage increase, bonus and/or boost in employee matched retirement contributions can make a significant difference in household income. Sure, the reform will have some downside on our industry – most notably in the form of limited mortgage and interest deductions and the removal of the home equity loan interest deduction – but the extra money in the pockets of millions of Americans will produce a great amount of upside. More borrowers will qualify for loans, more potential borrowers will feel confident they can take on a long-term mortgage and more dreams of homeownership will be fulfilled as these funds will allow some to stop throwing their money away on rent.
Rates are likely to rise again this year, so make this the time to reach out to your clients and help them plan for the financial peace of mind that comes with affordable down payments and monthly payments. Remind them that this extra income can work for them. Rather than spending it frivolously on dining or another pair of jeans, those extra dollars can support their financial future through homeownership!