A small Bohemia company is following the lead of large corporations that are passing on some expected savings from tax reform to employees in the form of bonuses.
Dayton T. Brown Inc., an engineering and testing company, is giving each of its roughly 210 employees a $400 bonus, Steve Marini, chief financial officer, said Friday.
President Donald Trump signed the tax overhaul bill into law Friday. The bill lowers the corporate tax rate in 2018 to 21 percent from 35 percent.
All of Dayton T. Brown’s full- and part-time employees will receive the bonuses, likely in January, Marini said.
“We’re going to save a significant amount of money on this new tax law and . . . certainly, we’re nothing without our employees,” Marini said.
The inspiration for the bonus was AT&T’s announcement Wednesday that it was giving its employees $1,000 bonuses, Marini said.
Dayton T. Brown, founded in 1950, is a private company that primarily serves the aerospace and defense industry. Its largest customers are the U.S. Navy, Sikorsky Aircraft Corp. and Northrop Grumman.
It has 170 employees in Bohemia. The rest work in Shelton, Connecticut, and Lexington Park, Maryland.
Marini declined to say how much money the company expects to save from its lower tax rate, or what its annual revenue and income are.
Most of the company’s employees are engineers, who earn an average annual salary of $80,000 to $90,000, he said. It also employs engineering technicians, who earn an average of $60,000, and engineering writers for its technical publications, who earn an average of $70,000 to $80,000.
Besides AT&T, other large companies that have said they will pay employees bonuses because of the savings they expect from the tax overhaul include Boeing Co., Comcast Corp. and Sinclair Broadcast Group.
Some Long Island companies are waiting to see the impact of the tax law changes.
At the Engel Burman Group, the largest locally headquartered developer of assisted-living facilities on Long Island, not enough is known about the tax law changes to say what effect they will have, said Scott Burman, a partner at the Garden City-based company, which employs about 2,000.
“If the new tax code does, in fact, prove to be an actual reduction in our corporate taxes, then those are certainly benefits we would pass on to our employees and any excess available funds would be used to make direct investments that would help to grow our businesses,” he said.
The reform-linked bonuses bode well for employee morale but are one-time moves, said Alex Raskolnikov, a tax law professor in Columbia University’s law school. “It’s a relatively cheap way for the companies to make it look like they’re sharing wealth but in fact, they’re sharing not so much,” he said. “Having said that, I’m sure people appreciate $1,000 and even $400.”
John Buhl, spokesman for the Tax Foundation, a Washington, D.C.-based think tank, said that while bonuses are “good public relations,” the true measure of the effectiveness of tax reform will be how companies invest in coming years.
The tax reform will be a factor in Dayton T. Brown’s future investments, but the company has not had those discussions yet, Marini said.
He said he didn’t believe that the tax rate cut will affect employees’ salaries, which may rise for other reasons.
“Fortunately, business is fairly strong right now in our main industry (aerospace and defense), so salary increases are likely to be higher than usual,” Marini said.
With Victor Ocasio