A True Tax Story With AT&T and The Billions It is Getting From the Tax Cuts

And the Crumbs It is Giving to Its Employees

Here's How Things Work in Trumpworld

Suppose you got a windfall, say a distant relative you never knew you had leaves you $10,000. Being a windfall you want to be generous and make a donation to charity. So you give the Red Cross or the United Way or something like them $75.00 and keep the rest for yourself.

This is the case with AT&T's decision to give its employees $1,000.00 each when Trumpie signs the tax bill. That sounds pretty nice until you get into the numbers and the facts. Here they are.

1. In 2016 AT&T made about $20 billion before tax and had a tax liability of about $6.5 billion.  Let's say this also is how they will do in 2017 and 2018.

2. The Republicans just lowered the rate from 35% to 21%, which means a $2.8 billion tax cut for AT&T each year for the next ten years. This is $28 billion over the next decade.

3. To try and curry favor with the Trumpster ATT&T will give each employee a one time bonus of $1,000 at a cost to AT&T of about $200 million.

4. This bonus is less than 1% of the tax savings, about the same as the $75 a person who got a windfall of $10,000.

5. The payment will be made in 2017 when AT&T has a higher tax rate, like 35% . So the taxpayers are paying about $350 of the bonus. The workers will get the money in 2017 when their tax rates are higher than they will be in 2018.

But wait, there's more. AT&T will spend $22 billion on capital expenditures in 2018, all of which is tax deductible. So for tax purposes instead of having taxable income of $20 billion they will get to deduct $22 billion and have a tax loss of $2 billion. With a 21% tax rate will mean that AT&T will get a tax refund (now or later) of about $400 million.

Bottom line, AT&T will go from having a  $6.5 billion GAAP tax liability to paying no taxes and getting a $400 million refund. WOW!!!