If Verizon weren’t in the mix, I’d be tempted to say this was a rural dudes with heavy machinery tax.
Most of the higher expense will come in Deere’s second quarter, the company said on Thursday. The expense was not included in the company’s earlier 2010 forecast, which called for net income of about $1.3 billion.
Earlier this week, Caterpillar announced it would take a $100 million hit:
“From our point of view, a tax increase like this cannot come at a worse time,” said Jim Dugan, a Caterpillar spokesman.
Although the tax doesn’t take effect until 2011, the company said it is required to recognize the impact in the period in which the law was signed. Industry analysts estimated the charge at about 13 cents a share.
That ought to do wonders for the construction sector.
The National Review got its hands on an e-mail from Verizon to employees:
The first is a provision that affects the Medicare Part D subsidy for prescription drug coverage. Because Verizon offers retiree prescription drug coverage today, the government provides a 28 percent subsidy to help offset the financial burden of offering that coverage. The subsidy was intended to help employers continue to offer prescription drug coverage for retirees so that these retirees would not have to use the Government Medicare Part D program. However, changes affecting the Part D subsidy will make it less valuable to employers, like Verizon, and as a result, may have significant implications for both retirees and employers.
Some of its generous plans will also be subject to the “Cadillac” tax, which may or may not go into effect in 2018, but Verizon has to be more responsible than Congress by actually planning for it.
