Tax Reform: ‘Investments Will Create New Jobs’

UPS ‘Will Invest An Additional $7 Billion,’ ‘Our Investments Will Create New Jobs’

“UPS today announced more than $12 billion in investments to expand the company’s Smart Logistics Network and significantly increase pension funding …” (UPS, Press Release, 2/01/2018)

• “The company plans to raise future capital spending above its previously committed six-to-seven percent of annual revenue.  UPS will invest an additional $7 billion over three years for the construction and renovation of facilities, to acquire new aircraft and ground fleet vehicles, and to enhance the information technology platforms required to support the network, manage the business and power new customer solutions.” (UPS, Press Release, 2/01/2018)

• “UPS also recently made a $5 billion tax-qualified contribution to the company’s three UPS-sponsored U.S. pension plans. This represents about $13,000 per participant.” (UPS, Press Release, 2/01/2018)

UPS Chairman and CEO David Abney: “This $12 billion investment program is an outgrowth of the opportunity for tax savings created by the Tax and Jobs Act…. We applaud President Trump and Congress for their bold action to improve the U.S. economy. Our investments will create new jobs, secure existing jobs and expand opportunities for our people…. Tax reform is a tremendous catalyst …” (UPS, Press Release, 2/01/2018)

Drug Makers Announce ‘Boost in U.S. Manufacturing From Tax Law Changes,’ Including New U.S. Plants

“Amgen Inc. said Thursday it will spend up to $300 million to build a new U.S. manufacturing plant as it detailed the impact of the recent tax law changes…. The new U.S. plant, which will make products for both domestic and foreign markets, is part of $3.5 billion in capital expenditures planned over the next five years. Amgen said it expects about 75% of planned capital spending to be in the U.S., up from about 50% in recent years.” (“Amgen Plans New U.S. Plant After Tax Changes,” The Wall Street Journal, 2/01/2018)

“Pfizer Inc. offered a rosy outlook for the year, outlining the benefits from the new U.S. tax law … The tax law “helps level the playing field to make U.S. companies more competitive,” Pfizer Chief Executive Ian Read said in a call with analysts and investors…. The company said it plans to … invest $5 billion in manufacturing and other capital projects in the U.S. over the next five years.” (“Pfizer Plans $5 Billion Boost in U.S. Manufacturing From Tax Law Changes,” The Wall Street Journal, 1/30/2018)

• “As a result of savings from the tax changes, Pfizer made a $200 million contribution to the company’s charitable foundation in the fourth quarter, plans to pay $100 million in bonuses to employees and will make a $500 million contribution to its U.S. pension plan by the end of September.” (“Pfizer Plans $5 Billion Boost in U.S. Manufacturing From Tax Law Changes,” The Wall Street Journal, 1/30/2018)

“Specialty drugmaker Amicus Therapeutics Inc. has decided to spend as much as $200 million on a new production facility in the U.S. instead of Europe.” (“The Tax Law, Just One Month Old, Is Roaring Through U.S. Companies,” The Wall Street Journal, 1/26/2018)

• “At Amicus Therapeutics, the new tax law solved a geographic dilemma. The Cranbury, N.J., company is developing an experimental drug to treat Pompe disease, a rare inherited disorder that causes muscle weakness and can be fatal. After early results for a new drug proved promising, Amicus wanted to increase production for further clinical testing and potential commercial sales. Amicus, which has been using Chinese contract manufacturer WuXi Biologics to supply the drug, decided in August to build its own facility. The U.S. was at a disadvantage to Europe, due to its 35% statutory federal income-tax rate for companies. Ireland’s corporate tax rate, by contrast, is 12.5%. Those financial considerations threatened to overshadow other advantages that a U.S. plant would offer, including the ease with which company officials could visit it, and the availability of talented workers in some regions. ‘Our strong assumption was that it would be very challenging to establish a new bio-manufacturing facility in the U.S.,’ Chief Executive John Crowley said in an interview. As the tax legislation advanced in Congress last fall, however, building in the U.S. began to look more attractive. On Dec. 21, a day after Congress passed the final measure, which lowered the statutory corporate rate to 21%, Mr. Crowley recommended to his board the company focus on finding a U.S. site. The company has narrowed its choice to three East Coast cities Mr. Crowley declined to identify, and expects to decide in the next month or two. It expects the plant to cost $150 million to $200 million, and to employ at least 200 people at an average pay of $100,000 a year.” (“The Tax Law, Just One Month Old, Is Roaring Through U.S. Companies,” The Wall Street Journal, 1/26/2018)

Positive Effects Of Tax Reform Also Seen At Apple, United Natural Foods, And Kimberly-Clark

“Just weeks after the federal government adopted the biggest tax overhaul in three decades, the effects are rippling through corner offices and boardrooms, with companies large and small dusting off once-shelved plans, re-evaluating existing projects and exploring new investment in factories and equipment. … The rapid adaptation goes well beyond the early announcements of $1,000 bonuses or minimum-wage increases for rank-and-file workers.” (“The Tax Law, Just One Month Old, Is Roaring Through U.S. Companies,” The Wall Street Journal, 1/26/2018)

• “Along with announcing its repatriation of cash held overseas last week, Apple Inc. pledged to invest $30 billion in the U.S. that it had held abroad, despite having to pay $38 billion under a one-time tax on those accumulated foreign profits.” (“The Tax Law, Just One Month Old, Is Roaring Through U.S. Companies,” The Wall Street Journal, 1/26/2018)

• “At United Natural Foods Inc., a grocery distributor with about 10,000 employees and more than $9 billion in annual revenue, the tax law has prompted a wholesale re-evaluation. Projects previously viewed as risky are being given new consideration, Mike Zechmeister, the company’s finance chief, said in an interview. The return on investment improved by 4 percentage points on a warehousing project in the Pacific region of the U.S. that the company had already decided to pursue, he said, primarily because of the new lower tax rate. ‘It’s going to impact all the decisions we make,’ Mr. Zechmeister said. ‘Almost all investments look better from an investment standpoint because we won’t have to pay as much tax.’” (“The Tax Law, Just One Month Old, Is Roaring Through U.S. Companies,” The Wall Street Journal, 1/26/2018)

• “Kimberly-Clark Corp., maker of Kleenex tissues, is spending hundreds of millions of dollars to put new machinery in one of its U.S. factories...” (“The Tax Law, Just One Month Old, Is Roaring Through U.S. Companies,” The Wall Street Journal, 1/26/2018)

MEANWHILE… ‘Dems Vow To Repeal’

“Democrats are vowing to undo parts of the GOP’s tax-code overhaul if they win back control of the House in November … No Democrats voted for the law, saying it’s a ‘scam’ that helps the wealthy at the expense of working families.” (“Dems Vow To Repeal Parts Of GOP Tax Law,” The Hill, 2/01/2018)

• SEN. CHUCK SCHUMER (D-NY): “There are probably a small number of provisions we might not repeal.” (“Dems Vow To Repeal Parts Of GOP Tax Law,” The Hill, 2/01/2018)