February 22, 2018
That’s a bit of background that might have been helpful for people reading this Washington Post article on Disney’s threat to withhold a $1,000 bonus from union workers unless they accept a contract offer from the company. According to the article, the company will be paying out a total of $125 million in one-time bonuses.
Last year, the company paid $4,422 million in taxes on $13,788 million in pre-tax income for an effective tax rate of 31.9 percent. If the new tax law lowers Disney’s tax rate to 21 percent (this assumes it pays the statutory rate, without being able to benefit from various special provisions in the tax code), it would save just under $1.5 billion based on its 2017 income. It would presumably save comparable or larger amounts in future years as its profits grow. By contrast, the bonuses are being offered to workers are a one-time event which may not be repeated.
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