Could the Tax Cuts and Jobs Act be the catalyst that moves even more organizations to the cloud?
Government agencies, healthcare organizations, and businesses across all industries are already migrating, with recent estimates expecting 85 percent cloud adoption by 2020. Now the question is, could this bill expedite the move by giving organizations extra incentive to reinvest?
The Tax Cuts and Jobs Act
“Under our framework, we will dramatically cut the business tax rate so that American companies can beat our foreign competitors,” said Donald Trump, addressing a crowd at a December 2017 tax reform rally. “This will be the lowest top marginal income tax rate for small and mid-size business in more than 80 years.”
Indeed, President Trump’s act, which was signed into law on December 22, 2017, slashed the statutory corporate tax rate from 35 percent to 21 percent—the lowest it has been since 1939. And while the American public is rather split on the bill (support is at 47 percent, according to a recent Politico poll), American businesses are poised to reap rewards. “Corporations are literally going wild,” tweeted Trump.
Well, maybe not all corporations. The law increases taxes on any earnings made overseas, where large cloud providers like Amazon, Google, and Microsoft currently house a lot of data. While there are tax incentives to return intellectual property to US shores, these companies have already invested billions in European facilities.
But for cloud providers operating within US borders and the companies that do business with them, it’s a win-win.
Tax Benefits to Businesses
So what to do with the newfound money? Some businesses are creating new jobs while other have announced wage increases; for example Spellex, a Tampa-based speech recognition software company, recently handed out $1,000 bonus checks to each employee.
And while this “sharing of the wealth” is wonderful for employees, organizations are also taking advantage of the tax cuts to invest in innovation:
- UPS announced a $12 billion reinvestment plan that includes updating its technology platforms
- Amgen Pharmaceuticals announced plans to invest in a new $300 million facility operating with lean technology
- Boeing announced it was boosting innovation $6 billion in the wake of the reform announcement
That’s not all. Even the White House has become a proponent of cloud computing.
The White House Looks to the Cloud
Don’t tell either of them, but Presidents Obama and Trump actually agree on something: cloud computing. The Obama Administration’s “Cloud First” initiative aimed to close thousands of federal data centers and migrate data from the Department of Agriculture, Defense, Interior, and Treasury to the cloud in order to save on capital expenses.
Now, Trump’s White House is doubling down on the initiative, saying that most of the government’s over 6,000 data centers could be consolidated and moved to a cloud-based storage system.
Just last December, The White House released a new report stating that federal government must eliminate barriers to using cloud technology. “Federal agencies must consolidate their IT investments and place more trust in services and infrastructure operated by others,” the report found.
The Benefits of Reinvesting in Infrastructure
With tax benefits in place and even the United States government moving to the cloud, is the timing right for your organization too? We’ve identified the top five benefits of adopting a cloud-based strategy.
- Cost. Shift IT from a capital expense to an operational expense by cutting back on physical equipment and the real estate needed to house it. With the cloud, you simply pay as you go.
- Competitive advantage. With enterprise-class tech at their disposal, small and mid-size organizations can more effectively compete with the big players in their space.
- Flexibility. Instantly scale up or down your cloud capacity based upon fluctuating or growing bandwidth demands.
- Compliance. Many cloud providers are certified to meet the specific compliance requirements of your industry, such as HIPAA.
- Peace of mind. The backup functionality a cloud provider offers means there’s little chance of systems going down, and if they do, uptime is often nearly instant.
While only you know the needs of your organization and your current financial situation, if you have the means, the time to invest in infrastructure is now. Ready to re-evaluate your IT infrastructure? Florida-based DSM can provide a comprehensive IT audit so you can learn exactly how a cloud-based strategy can benefit your organization.