Perhaps sensing a risk that lawmakers will fail to reach consensus on tax reform, American CEOs are rallying to the cause.
Peer group Business Roundtable, chaired by JPMorgan Chase CEO Jamie Dimon, has just surveyed 123 of its members, and, not surprisingly, 90% of them fear that delaying tax reform will hurt the economy.
Of more concern, 57% said slow progress in Washington would delay their capital spending plans, while 56% said it would hold up their hiring plans.
“Jobs and the economy are at stake,” Dimon said. “This is an opportunity we must urgently act on.”
AT&T CEO Randall Stephenson is among leaders who have personally pledged to hire more people in the event of reform. “If you can have a tax reduction of 35% down to, you pick your number, 25% or 20%—to think that wouldn’t cause additional investment is nonsensical. I know exactly what AT&T would do: we would invest more,” Stephenson told CNBC.
“Jobs and the economy are at stake. This is an opportunity we must urgently act on.”
The survey comes after Donald Trump’s revamped healthcare legislation passed through the House via a narrow majority yesterday, indicating the administration is capable of uniting Republicans to get bills passed.
The victory could inspire greater hope that the president also can successfully execute on his tax agenda, though the healthcare bill still needs to get through a potentially more hostile Senate to become law.
That could take tax reform off the agenda for months, making it tough for the administration to meet its ambitious August timetable.
A main bone of contention is how any cuts should be funded. Treasury Secretary Steve Mnuchin has suggested a reduction in the corporate tax rate to 15% would partly pay for itself by stimulating economic growth, a position that might not sit well with Republican debt hawks.
The business community is currently split on whether a 20% tax on imports, otherwise known as a border-adjustment tax proposed by some House Republicans, should be part of any reform.
CEOs participating in Business Roundtable’s survey were asked to assume “the most favorable outcome” for their company, with regard to the introduction of possible measures to fund corporate tax cuts, such as a border adjustment tax.
“Business Roundtable has consistently acknowledged that significant revenue raisers, such as the elimination or modification of tax credits and deductions, will be needed to offset the cost of the corporate rate reduction and international tax reforms,” the group said.