Published: Sat, January 27, 2018
Business | By Max Garcia

FedEx credit tax cuts for $1.5 billion enlargement of Indianapolis hub

FedEx credit tax cuts for $1.5 billion enlargement of Indianapolis hub

It's the sort of investment President Donald Trump touted Friday during a speech at the World Economic Forum in Davos, Switzerland. "And next month, 9 out of 10 Americans will see bigger paychecks thanks to tax reform".

FedEx Corp. ramped up staff pay boosts and corporate investments arising from the December passage of the U.S. Tax Cuts and Jobs Act, saying it would spend more than $3.2 billion to increase employee compensation, bulk up the company's pension plan and invest in several of its hubs. It also permanently lowers the corporate rate to 21 percent from 35 percent.

The company plans more than $200 million in higher compensation, about two-thirds of which will go to hourly employees with the remainder funding increases in performance-based incentive plans for salaried workers. Almost two-thirds of that amount will go towards increasing wages for hourly employees and one-third towards increasing incentive programs for salaried employees.

FedEx is one of a number of companies in recent weeks to announce reinvestment as a result of the tax overhaul.

FedEx CEO Fred Smith told FOX Business' Stuart Varney on "Varney & Co." earlier this month that the provisions of the tax bill would allow the company to expand its already robust domestic investment, suggesting at the time that FedEx would "probably" also raise worker pay.

Wall Street economists say workers would benefit more from permanent wage increases, as opposed to one-time bonuses.

"This is a good thing", he said.

The delivery company also said it plans to release details in the spring about plans to modernize its Memphis SuperHub.

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