Business Leaders Concerned with Biden Tax Hike Plan
Business leaders are concerned the Biden administration’s proposal to fund a massive federal infrastructure program by raising taxes on corporations will result in job losses.
“We very much are supportive of the president’s call for a bold investment in infrastructure,” Jay Timmons, president and CEO of the National Association of Manufacturers, told CNBC.
But, Timmons said, Biden’s plan to fund it by “raising the corporate tax or raising taxes on businesses is a job killer, plain and simple.”
A recent NAM study by Rice University economists concludes that the proposed tax hikes could lead to one million fewer jobs in the first two years of the infrastructure plan.
“This study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: Increasing the tax burden on companies in America means fewer American jobs,” Timmons said.
Raytheon CEO Greg Hayes recently said Biden’s proposal to raise the corporate tax rate from 21% to 28% will cost the aerospace and defense manufacturer about $1 billion annually—money it would otherwise invest in research and development.
Raytheon budgets about $5 billion a year for capital spending, research, and development, Hayes said, while the corporate tax proposal would cut that spending by 20%.
“That’s a billion less that I would otherwise invest,” he said April 7 at the Economic Club of Washington D.C. “I have to reduce my investment budget by 20%. I’m not sure that’s exactly what the president wants to have us do.”
CBIA president and CEO Chris DiPentima says Connecticut business leaders’ initial positive response to the infrastructure plan was tempered by the proposed 7% increase in the corporate tax rate.
“While it may create jobs through construction and infrastructure, it could take away jobs in other sectors because businesses would have less money to invest,” he said.
“Having a tax rate go down, then four years later goes up—and then what happens four years from now? That uncertainty at the state and federal level is really what drives businesses crazy.
“They just don’t know what types of investments they can make for the long term if they’re not certain what their expenses will be for state or federal mandates.”
The Business Roundtable, a national group of chief executives that includes Connecticut companies such as Cigna, Pitney Bowes, Stanley Black & Decker, and Synchrony, released a survey this week revealing that 98% of CEOs say the proposed tax hike will hurt their company’s ability to compete.
And, like Hayes, 75% of the CEOs who responded said increased taxes will negatively impact their company’s investments in research and development.
Timmons said hiking corporate tax rates is a thumb in the eye to U.S. manufacturers.
“We kept our promises following the enactment of the 2017 tax reforms,” he said. “We raised wages and benefits, we hired more American workers, and we invested in our communities.
“If we undo all those reforms, all of that will be put at significant risk. Manufacturing workers will lose out on jobs, growth, and raises.
“America just can’t afford that, especially now.”
The NAM study found that by 2023, the nation’s GDP would be down by $117 billion, by $190 billion in 2026, and by $119 billion in 2031.
In addition, the study concludes that the higher tax rate will translate into businesses making less capital investment.
The study found that “ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023, $83 billion less in 2026, and $66 billion less in 2031.”
Since the push back began, the Biden administration has indicated a willingness to negotiate a new corporate tax rate.
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