US CEOs think Biden’s corporate tax rate hike will have negative impact – survey
The bosses of America’s largest companies overwhelmingly believe Joe Biden’s proposed increase in the country’s corporate tax rate would have a negative impact on their businesses, according to a survey released on Monday.
The influential business lobbying group Business Roundtable, whose members include Amazon’s Jeff Bezos and Apple’s Tim Cook, released a survey of 178 CEOs on their thoughts on an increase in corporate tax. The survey specifically questioned the CEOs on the president’s proposed corporate tax hike, which would raise the corporate tax rate from 21% to 28%, to pay for his $2.3tn infrastructure plan.
According to 98% of the CEOs surveyed, the corporate tax increase would have a “moderately” to “very” severe impact on their company’s ability to compete on a global scale. Threefourths of the CEOs said that the tax would negatively affect their ability to conduct research and development innovation and 71% said it would negatively affect their ability to hire new employees.
The increase in the corporate tax rate, along with a proposal for higher taxes on companies seeking to get lower tax rates abroad, is part of Biden’s plan to undo the tax cuts Donald Trump made in 2017.
When the cuts were passed, Republicans argued that it would encourage domestic investment, which would increase worker productivity and ultimately raise wages. Democrats and some economists are skeptical that any of the benefits from the cuts were seen in the economy before the Covid-19 pandemic.
A report released earlier this month from the progressive Institute on Taxation and Economic Policy found that at least 55 of America’s top companies, including FedEx and Nike, paid no federal corporate income tax because of loopholes and substitutes. The report found that the tax breaks cost $8.5bn in potential tax revenue.
“Our tax revenues are already at their lowest level in generations,” Janet Yellen, treasury secretary, told reporters last week. “If they continue to drop lower, we will have less money to invest in roads, bridges, broadband and R&D.”
But business leaders and lobbying groups have made clear in the last weeks similar concerns that Biden’s tax plan would hurt businesses and ultimately offset the progress made by his infrastructure plan.
“It will actually obviate all the economic gains we could possibly gain in infrastructure,” Neil Bradley, executive vice-president of the US Chamber of Commerce, told the Washington Post.
The US Chamber of Commerce and other business groups have made promises to lobby against the corporate tax increase. While Republicans have been generally supportive of spending on infrastructure, the party is unified in opposition to tax hikes. This means
that moderate Democrats, especially Joe Manchin, the party’s most conservative member in the Senate, will be the stars of the debate around a potential increase.
Manchin has already said that he would not support an increase to 28%, but said going up to 25% is something he could get behind.
“We have to be competitive, and we are not going to throw caution to the wind,” he told a local West Virginia radio station.