Paychex is among the locally based companies being impacted by the new federal tax legislation.
CEO Marty Mucci says the company currently is in a 35-percent tax bracket, but with the new tax bill, the company will see a substantial reduction in corporate taxes.
“We expect that to drop probably 10 to 12 percentage points so it will be significant for us and so now we’re looking at, what do you do with that (additional cash) ? Some will flow to the bottom line to shareholders and some, we believe is best used by investing in other technology projects that will continue to sustain our growth in the future and increase our growth in the future,” Mucci told WXXI News.
Although some large, high profile companies like AT&T have already said they are taking actions like giving out bonuses and investing money back into their businesses due to the just-passed legislation, Mucci believes a lot of firms, like many of those Paychex has as clients, will take a cautious approach on what they do with any tax savings.
“I think most companies, the majority of companies will wait, make sure they read the bill, understand exactly what the tax impact is to them. How long that impact is and then start making decisions on some of those things.” But Mucci does see the possibility of positive impacts from the tax legislation with some businesses considering the possibility of adding some staff if they are more flush with cash.
Paychex this week reported fiscal 2nd quarter earnings of $217 million and revenues of just over $826 million. Both were up 7 percent compared to last year at this time.
Mucci says the company will likely see increased need for its services from businesses who are trying to navigate the various changes in the tax legislation.
“We’ll take them through this year-end, we’ll be able to work closely with the IRS and the Treasury Department on what the rules are changing, and our systems and compliance folks will have this all set up and ready to go as quickly as they give us the changes, we’ll be ready to go with it.”
