The Retail Industry Benefits From GOP Tax Reform In Short Term

The Retail Industry Benefits From GOP Tax Reform In Short Term

All over the country, businesses of all sizes have announced small to massive cases of success when it comes to the so-called windfall from the GOP tax reform bill. Analysts have considered the tax reform legislation a winning move to creating a pro-business environment; however, the celebrations and perceived benefits from industries like the retail sector, for example, are evident, but short term.

It’s only short-term

Lauren Hirsch, a retail reporter for CNBC online, noted that even with the tax reform and the ensuing windfall, the concerns of industry executives and investors looms for a variety of reasons. The tax reform benefits that the industry has lauded are merely a cover-up to the continued decline in brick-and-mortar sales at a variety of retail locations and business types.

black friday
PC: Wikimedia Commons/Paulo JC Nogueira

Hirsch writes: “Investors and advisors…said they don’t believe lower corporate taxes will have any long-term substantive impact on business models that are not working. They believe it may help the stronger transform faster, but they say it will not save those that are too far behind.” Her report also cites that dying shopping malls and brands dependent on fading consumer trends have yet to see any long-term solutions for saving their companies.

Regardless, the health of the retail industry is dependent on a variety of factors that carry more weight than some increased savings on an annual tax bill.

The author’s take: No surprise

To be brief, there is no surprise about the benefits from the tax legislation. Though this other is overly critical of President Donald Trump’s fiscal policy decisions (like not issuing steeper cuts in spending on defense etc.), the tax windfall is undoubtedly a benefit for business owners and their employees (indirectly).

But, the staying power of the benefits from the tax savings will vary by business, by vertical, and by industry. In the case of physical (going to the mall) retail, these perks from the windfall are ancillary given the danger of the industry’s decline and economics happening (i.e., creative destruction).

What others are saying and doing: There are exceptions in retail

There are exceptions of success and needed benefit among retail companies.

According to recent reports, Walmart–one of the world’s largest physical-location retail companies and America’s most significant–announced that the company would be using its new saving to increase hourly wages for their employees to $11 per hour.

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“We plan to continue investing in you, in our customers through lower prices, and in our future–especially in technology to help improve your jobs and the experience for our customers,” Walmart CEO Doug McMillon wrote on the company’s blog. “So, we’re pleased to tell you that we’re raising our starting wage to $11 an hour for Walmart U.S., Sam’s Club, Supply Chain, eCommerce and Home Office hourly associates effective in February.”

PC: Public Domain.

Additionally, Target and Lowe’s saw stock prices climb the other day because of announcements and actions the companies took to utilize the tax reform bonuses. Subsectors, like retail convenience stores or franchisees, expect to see similar top-down benefits.

Americans for Tax Reform-a pro-taxpayer rights group–alleges that over 2 million Americans and counting will receive raises or bonuses from their employers, thanks to savings from the new tax regime. The organization also has a comprehensive list of companies who have announced raises or bonuses–and its growing.

What do you think? Are you getting a raise or a bonus because of the tax savings? Tell us all about it in the comments below!