A new Business Roundtable survey of its CEO members concluded that increases in U.S. domestic and international tax rates would have a negative effect on business expansion, hiring and wage growth, as well as investments in research and development (R&D) and innovation, and U.S. competitiveness in the global economy.
According to the survey, 98% of CEOs said that an increase in the corporate tax rate from 21% to 28% would have a “moderately” to “very” significant adverse effect on their company’s competitiveness.
Some 75% of CEOs said that an increased tax burden on U.S. companies would negatively affect their company’s investments in R&D and innovation, while 71% said it would negatively affect their ability to hire, and nearly two-thirds said it would result in slower wage growth for U.S. workers.
Meanwhile, 88% of respondents agreed that maintaining globally competitive U.S. tax policies is important for business expansion. When asked about an increase in the GILTI rate from 10.5% to 21%, 76% of CEOs reported it would have a “moderately” to “very” significant impact on their company’s competitiveness, including plans for U.S. capital spending and hiring.
Business Roundtable Tax and Fiscal Policy Committee chair Gregory J. Hayes said: “The tax system needs to support innovation, R&D, capital investment and economic 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.
“Prior to the pandemic, the U.S. corporate tax rate drove economic growth, creating six million jobs, pushing the unemployment rate to a 50-year low and increasing middle class wages. From 2018 to 2019, major U.S. companies grew their R&D by 25 percent compared to the two years prior.”
He added: “The current U.S. corporate tax rate has also helped put U.S. businesses on a more level playing field with global competitors and encouraged businesses to invest and grow here in the United States.”
Business Roundtable president and CEO Joshua Bolten said: “The proposed tax increases on job creators would slow America’s recovery and hurt workers. This survey tells us that increasing taxes on America’s largest employers would lead to a reduced ability to hire, slower wage growth for workers and reduced investments in research and development—all key components needed for a robust economic recovery.
“When U.S. companies can compete around the world, they can invest in America and help generate more jobs, pay higher wages and support all of their stakeholders. While Business Roundtable believes infrastructure investment is a foundation for long-term economic growth, we urge policymakers to avoid tax policy changes that would run counter to the goal of increasing economic growth and job creation.”