Korn Ferry Executive Survey: Corporate Savings Due to Tax Overhaul Will Not Mean Salary Increases or One-Time Bonuses for Workers
Eighty-six percent of the respondents said their organizations will not be providing additional base salary increases to employees as a result of the new legislation, which cuts the corporate tax rate from as high as 35 percent to a flat rate of 21 percent, among other changes that favor business. Ninety-one percent of organizations also indicated that it is not likely that they will be providing a one-time bonus to employees due to the tax savings.
According to the survey, the top five planned ways corporations will use the savings from the tax cut include (in order):
- Increasing capital investments at a faster rate (49 percent)
- Increasing cash reserves (41 percent)
- Increasing investment in training and development (34 percent)
- Increasing acquisition of new businesses (32 percent)
- Passing on the savings to shareholders via increased dividends (32 percent)
“While it is a positive sign that companies are planning to use the tax
savings to invest in their people through training and development, the
sentiment that compensation will increase as a result of the new
legislation appears to not be panning out,” said
The survey also found that even though the corporate tax cut legislation
went into effect on
Only a third (31 percent) say their organizations are very firm on what they will do with the savings, and about half (46 percent) say they are not yet sure how much the total tax savings will be.
“This is the most sweeping tax overhaul in decades, and it is critical that organizations work quickly to first quantify the savings and then put in place comprehensive strategic plans to address range of investment alternatives,” said McMullen.
About the survey
Tracy Kurschner, 612.309.3957