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Former President Donald Trump recently spoke to a group of influential CEOs, expressing his desire to further reduce corporate tax rates, which he had reduced during his time in office. Meanwhile, President Biden’s chief of staff, Jeffrey Zients, highlighted the benefits of Biden’s focus on global alliances for their businesses.
Trump and Zients met privately in Washington on Thursday with the Business Roundtable. Zients filled in for Biden, who was attending a summit of Group of Seven leaders in Italy. The prominent group representing more than 200 CEOs advocates for preserving the corporate tax breaks enacted by Trump in 2017.
There has been no official comment on the content of the talks, but it is clear that Biden and Trump have very different views on taxes and the economy as they face off again in 2020.
Trump proposed cutting the corporate tax rate to 20%, according to a person briefed on the meeting who spoke on condition of anonymity because the talks were private. His speech focused on taxes, inflation and the need to increase oil production.
At the same time, Zients stressed that the United States’ good reputation around the world and independent institutions such as the Federal Reserve promote trust, which helps American capitalism thrive. This is a subtle criticism of Trump, who has previously imposed tariffs on allies and sought greater control over Federal Reserve policy. Zients also attributed the post-epidemic economic recovery to the Biden administration’s cooperation with businesses on supply chain issues. He suggested that Trump’s plans to deport millions of people and launch potential trade wars could exacerbate inflation.
The Business Roundtable has made keeping taxes low a priority and announced a $10 million campaign to keep the corporate tax rate at 21% and promote pro-business tax policies. Code and expanding tax incentives for research and development.
Some of the 2017 tax cuts will expire after 2025, which could result in higher taxes for most American households. This has sparked a conflict between Democrats and Republicans over how to revise the tax system. CodeBoth parties want to keep tax cuts for people making less than $400,000, but Trump’s supporters want to expand them, including for corporations. Biden has proposed raising the corporate tax rate to 28% and increasing taxes on the wealthy to fund middle-class programs.
The Biden administration insists that tax cuts should be offset by funding sources, while the Trump administration’s 2017 tax overhaul led to a larger budget deficit because the expected growth did not materialize. Recent studies show that Trump’s corporate tax cuts did spur business investment, but not enough to cover the costs. The Congressional Budget Office estimates that extending the expiring tax cuts would cost $4.9 trillion over a decade, including additional interest on the debt, while the federal debt would approach $27.6 trillion.
Business leaders believe lower taxes would improve global competitiveness, leading to more hiring and technology investment, which in turn would boost economic growth. The CEOs of Cisco and Procter & Gamble bet Warned that higher taxes would reduce investment in the United States.
Jon Moeller, CEO of Procter & Gamble betHe said the tax increase could lead to higher consumer prices, limited wage growth and affect shareholders. He stressed that it was naive to think that companies could easily absorb these costs and that it would have a wider social impact.
Biden’s budget proposal includes nearly $2.2 trillion in corporate tax increases over 10 years, more than half of which would come from raising the corporate tax rate to 28%, which is still lower than the 35% before Trump’s tax cuts. Trump believes that raising corporate taxes will hurt the economy and has warned that Biden’s tax plan could destroy jobs and ultimately hurt the country.
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