A majority of US CEOs are saying Biden’s corporate tax increase would negatively affect business.
Wage growth, hiring, and research and development spending would slow as a result, the CEOs said.
Biden proposed upping the corporate tax rate to 28% from 21%, but has since said he may compromise.
American business leaders are warning a corporate tax rate hike proposed by President Joe Biden could make it harder to hire workers and increase their wages.
In a survey of 178 CEOs conducted by the Business Round Table published Monday, a majority of respondents said the increase – from 21% to 28% – put forward by the White House in March would hinder economic expansion, research and development spending, wage growth, and hiring.
The results showed:
98% of CEOs said the increase would have a “moderate” to “very” significant adverse impact on competitiveness;
75% said it would negatively affect spending on research and development;
71% said it would negatively affect their ability to hire; and
about 66% said it would slow US wage growth.
“As we look toward recovering from the COVID-19 pandemic, keeping competitive tax policies in place is needed to help reinvigorate the U.S. economy and lead to more opportunity for Americans,” Gregory J. Hayes, chief executive of Raytheon and chair of the Business Roundtable Tax and Fiscal Policy Committee, said in a release.
Biden’s revealed his $2 trillion infrastructure plan last month, which included spending on upgrading roads, bridges, and affordable housing, paid for in part by the corporate tax increase. The president has since said he may agree to compromise with a 25% rate, instead of the originally proposed 28%.
Amazon CEO Jeff Bezos has been on of the few to say his firm supports the tax increase, calling the move “a bold investment in American infrastructure.”
But in the Business Round Table survey, Hayes said the lower corporate tax rate from before the pandemic “drove economic growth, creating 6 million jobs, pushing the unemployment rate to a 50-year low and increasing middle class wages.”
In 2017 under the Trump administration, the government lowered the corporate tax rate to 21% with the Tax Cuts and Jobs Act. But it may not have turned out to be the economic “rocket fuel” he had promised.
The Tax Policy Center, an independent research group created by the Urban Institute and Brookings Institution, actually found “little economic benefit” from the 2017 law, saying it largely benefited corporations and created only modest wage growth.
Biden decried the former president’s tax cuts, saying he’s “sick and tired of ordinary people being fleeced.”
But according to the Tax Foundation, an independent tax policy nonprofit, Biden’s tax plan would cut economic output by 1.47% over the long-term, causing a 1% lower wage rate and 518,000 fewer full-time jobs.
“The proposed tax increases on job creators would slow America’s recovery and hurt workers,” Joshua Bolten, president and CEO of the Business Roundtable, said.
The heavily pro-corporate interest Business Roundtable was formed in 1972 and represents nearly every sector of the American economy. Its membership rolls currently include 3M, American Airlines, Amazon, and Coca-Cola, and more.
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