Senior business executives who in the past have made speeches about the need for infrastructure spending are mostly silent, choosing to privately complain that Biden’s plan is too expensive, too partisan, too burdensome. independent social policy and not at all what they had in mind. . Jeff Bezos, CEO of online retail giant Amazon, released a statement Tuesday that at first glance looked like an endorsement of Biden’s plan.
Except it wasn’t.
Bezos, like other CEOs, nodded in favor of accepting a higher top corporate tax rate – although he actually put his name behind it. But he stopped long before explicitly supporting Biden’s infrastructure proposal and instead called for a “balanced solution” to boost US competitiveness. Beneath the surface, the corporate world generally despises Biden’s plan in its current form and is obsessed with his defeat.
“This plan would make America less competitive, which would mean less US economic growth and less job creation,” said Neil Bradley, director of policy at the Chamber of Commerce. “The benefits of infrastructure would be offset by punitive tax increases. And if they move forward with only Democratic votes, the concept of doing anything on a bipartisan basis would be gone and that would only reinforce the kind of blockage that has kept progress on all other issues.
Executives at some of America’s biggest companies complain much more bitterly in private about the White House’s approach, arguing that increasing the top corporate rate to 28% from 21% – without restoring the eliminated deductions in President Donald Trump’s 2017 tax cut bill – would hurt hiring and the economy.
And they say instituting a global minimum tax that other countries might not adopt would lead to more jobs and profits outside the U.S. They also complain about the lack of sufficient awareness in the business community. ahead of the rollout of the infrastructure plan and fear Biden will give up. his campaign promises to work on a bipartisan basis on such radical legislation.
Executives often say they could live with a corporate tax rate of around 25% – which groups like the Business Roundtable previously supported – but only with reinstated deductions and without much of the international reform.
“I didn’t think 21% was the right number when we brought in tax reform. And 25 percent is a place where you could probably get a lot of consensus, ”said the CEO of one of the world’s largest financial firms on condition of not being named. “It’s not the rate, it’s all the other things that would make us less competitive in the world. And the jobs will disappear if we do these kinds of things. “
The CEO added that the business world will generally not support any bills pushed with only Democrats’ backing through the budget reconciliation process – a move that allows legislation to dump the Senate by simple majority – than the House Blanche used to adopt her $ 1.9. trillion dollar stimulus bill.
“It really matters that it’s totally partisan. It sounds cliché, but business people really want to sit in the middle and support things that have bipartisan support, ”the CEO said. “Biden made a lot of promises to do it differently. But despite having a brighter veneer, it looks like Trump is doing everything in his own way.
An executive at a Fortune 100 tech firm said it’s easy for Amazon and other companies to signal their willingness to pay a higher overall corporate rate. But the executive said the corporate world would fight much of the rest of the proposal.
“None of these guys can realistically with a straight face oppose a 25 percent rate,” the executive said. “This is not where the fight is. At all.”
The two executives say that apart from a few hastily organized conference calls shortly before Biden presented his “American Jobs Plan,” there hasn’t been much business outreach, an complaint that retained former President Barack Obama throughout his two terms.
The White House largely rejects these complaints. Administration officials note that many executives, including JPMorgan Chase CEO Jamie Dimon, previously supported an enterprise rate of 25%, just slightly below the 28% offered by Biden.
They also say that 2012 GOP presidential candidate Mitt Romney ran on a platform that featured a maximum rate of 25% and that Trump’s National Economic Council director Larry Kudlow mostly praised of Romney’s plan.
On engagement, administration officials said White House advisers Cedric Richmond, who heads the Office of Public Engagement, and Brian Deese, director of the National Economic Council, met with leaders of Bank of America, State Street, Wells Fargo and Goldman Sachs on infrastructure. plan in a session hosted by the Financial Services Forum.
They also say Richmond and Deese briefed 25 CEO members of the business roundtable. And other officials spoke to business groups such as the National Manufacturers Association and the Aerospace Industries Association, as well as executives of large broadband Internet companies and agricultural representatives.
More generally, White House officials say that while Biden commits to covering much of the cost of the $ 2.5 trillion plan, he acknowledges that a conversation about how to do it only does to start.
The White House is still hoping to craft a bipartisan deal even though all signals currently suggest Biden is ready to sign a bill with only Democrat support.
“We want to work across the aisle with briefings and discussions with GOP lawmakers,” NEC deputy director David Kamin said. “Regarding the corporate tax reform, the president has brought this forward and it’s his idea of how it could be paid, but he’s really open to hearing other ideas.
Kamin added that “if others have ideas to come up with, they should be part of the discussion.”
Perhaps the biggest fear in American businesses right now centers on the idea of a 21% minimum tax on the foreign income of American companies, which executives and conservative economists are saying is would put American companies at a distinct disadvantage and could lead to American companies looking for companies again. “Inversions” in which they take addresses abroad.
Treasury Secretary Janet Yellen on Monday urged developed countries to adopt a global minimum tax as a way to reduce any anti-competitive disadvantages that could result from Biden’s proposal.
But business groups say talks about a global minimum tax have been going on for years and there is no guarantee a deal will be reached anytime soon. “Of course, it would be great if we had a system where all the advanced countries worked in harmony,” said a tax expert working with companies opposed to Biden’s plan in its current form. “But we’ve been talking about this for years, and tax competitiveness and the right to set your own rates has always been a big national sovereignty issue for other governments.”
The White House, in turn, says its plan encourages but is not based on an international tax deal. “We are approaching this problem with a reform that if you are a foreign company based in a country that does not adopt a minimum tax, you risk denying deductions,” Kamin said. “This means that we are really leveling the playing field.”