If the new tax cuts are going to spur the kind of rapid growth that its sponsors promised, it will depend on tens of thousands of businesses following the path of James Stephenson.
The chairman and chief executive of Yancey Bros., an Austell-based company whose main business is selling and servicing Caterpillar equipment, sees the cuts as a chance to hire workers and drop a $500 bonus on all current employees.
The cuts probably mean more profit, he said. “We try to share sacrifices and when business is good, we try to share the benefits with everybody in the company.”
The law passed late last year reduced the top corporate rate from 35 to 21 percent, slashing taxes overall by $1.5 trillion. Sponsors said the cuts will make up for that by fueling spending and hiring.
In effect, they expect companies across the country to mimic Yancey Bros.
Stephenson sees tax cuts not only boosting his profits, but that of his customers. That in turn, will add to revenues at Yancey Bros., a century-old, family business with 1,200 employees.
He is hiring workers to help add inventory, he said. “We had a good year last year and we look to have a good year this year.”
It is too early to say how many companies will turn higher profits into hiring. But as the year gets underway, a survey of companies in metro Atlanta showed a mix of attitudes.
Atlanta-based SunTrust announced that it will contribute an additional $50 million in grants to groups that add to "financial awareness" through education, entrepreneurship, counseling and training. The bank will also add a 1 percent of each employee's salary as a one-time payment into their 401(k) accounts.
The company is also making its minimum wage $15 an hour, while giving raises overall to about 20 percent of its 24,000 workers, said spokeswoman Sue Mallino.
"We wanted to take a thoughtful approach," she said. "We were looking for actions that would have long-term sustained benefits."
A number of the larger stars in Atlanta’s corporate constellation were still being coy about their plans.
For example, a Coca-Cola spokesman said the company has announced no specific response to the tax cuts. But he said the company stood by an earlier statement that expressed support for the tax cuts.
“We are confident it will enhance the ability of U.S.-headquartered companies like ours to compete globally on more equal footing and better enable us to reinvest in our U.S. business system,” the Coke statement said.
A spokesman for Sandy Spring-based UPS said the company had nothing to add to an earlier statement by David Abney, the company’s chairman and CEO.
Lower taxes will boost American businesses, he said Dec. 22. “This economic growth will raise demand for UPS services and we look forward to helping our customers take full advantage of this opportunity.”
Higher profits will be used to “expand and accelerate investments,” Abney said, “which will further stimulate job creation.”
Atlanta-based Home Depot may have a response to the tax change. Or it may not.
“We haven’t announced anything,” said spokesman Stephen Holmes.
Democratic critics of the tax bill argued that its effect on growth would be modest, that the cuts would leave a gaping deficit, which would likely shove interest rates higher and provide an excuse for cutting popular programs like Social Security and Medicare.
Skeptics also argue that companies depend on demand and they won’t start hiring until they know there’s enough business to support new investments and jobs.
But in touting the plan, Republican leaders said profits will be plowed back into business first and that growth will be so rapid and hiring so strong that it will make up for the initial lost tax revenue.
And there is certainly cause for short-term optimism: 44 percent of employers plan to hire full-time employees this year and 51 percent will hire temporary employees, according to a survey conducted for CareerBuilder, the Chicago-based employment company.
Other polls show economic confidence high among consumers.
While most economists predict a year of solid growth and hiring, few have thus far agreed that growth will rise above 3 percent, let alone 4 percent. For its part, the Federal Reserve on Wednesday did raise its forecast for this year, but only from 2.1 percent to 2.5 percent.
There are some signs — like a lower share of people working — that damage caused by the 2007-09 recession still impinges on the economy.
And whatever the corporate icons decide, overall job growth generally depends on what smaller companies do.
All else equal, a company that has only about $100,000 in revenue could still expect to see taxes lowered by $3,500 to $5,000 this year, said Jack Mozloom, spokesman for the National Federation of Independent Business, which counts 325,000 companies as members.
If there are higher profits, companies will pour the money back into the business, he said. “Our members say they will increase wages and benefits, purchase equipment, create new positions – they all have plans for it, I’ll tell you that.”
“I’m not GE,” he said. “I am not going to be spending hundreds of millions of dollars. But I am excited about having enough money to purchase another piece of equipment.”
The 16-year-old company shreds documents and paper and carts recyclables. Business has been on the upswing.
Joiner expects business to keep improving and that will mean he’ll have the money to buy another truck. “And somebody’s going to have to drive that truck.”
MYAJC.COM: REAL JOURNALISM. REAL LOCAL IMPACT.
AJC Business reporter Michael E. Kanell keeps you updated on the latest news about jobs, housing and consumer issues in metro Atlanta and beyond. You'll find more on myAJC.com, including these stories:
- Atlanta tech companies worry that tax bill undermines research
- Tax package: Atlanta businesses want cuts, fret about other impacts
- Small business: struggling, surviving and the money stays local
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