WASHINGTON – Former President Donald Trump told an influential group of CEOs that he intends to further reduce the corporate tax rate he lowered while in office, while President Joe Biden’s chief of staff told them separately that the emphasis of the current democrat in global alliances would help your business.
Both Trump, the presumptive Republican nomineeand Jeffrey Zients met behind closed doors Thursday with the Business Roundtable in Washington, with Zients filling in for Biden during the President’s meetings with the Group of Seven leaders in Italy. The prominent group representing more than 200 CEOs just launched an effort to preserve the corporate tax breaks that Trump signed into law in 2017.
Neither side has publicly commented on what was said at the meeting, which comes as Biden and Trump head toward a rematch in 2020 with sharply different views on taxes and the economy.
Trump said he would like to reduce the corporate tax rate by one percentage point, to as much as 20%, according to a person familiar with his comments who insisted on anonymity to discuss the closed-door meeting. The former president focused his comments on taxes, inflation and the need for more oil production, the source said.
Another person familiar with the conversations said Zients argued that America’s global reputation and its independent institutions, like the Federal Reserve, fostered the kind of global trust that allowed U.S. capitalism to thrive. The statements were a blow to Trump, as the former president had previously hit allies with tariffs and sought greater control over Fed policies.
Zients said the post-pandemic economic recovery was possible in part because the Biden administration worked with companies on issues such as supply chains, the person said. And he indicated to CEOs that Trump’s promises to deport millions of people and wage potential trade wars could increase inflation. The person also insisted on anonymity to discuss details of the meeting, and was not authorized to do so publicly.
The Business Roundtable has made reducing taxes its top legislative priority. The group announced it would spend at least $10 million on a campaign to keep the corporate tax rate at 21%, as well as promoting business-friendly changes to the U.S. tax code and pushing to expand tax incentives for research. and development.
Parts of the 2017 tax cuts that Trump signed into law as president expire after 2025, likely raising taxes for most U.S. families. This sets up a showdown between Democrats and Republicans over how to rewrite the tax code.
Leaders in both parties want to preserve the cuts for those earning less than $400,000. But some Trump supporters want to expand the tax cuts, including for businesses. Biden would like to raise the corporate tax rate to 28% and introduce higher taxes on the rich to fund programs for the middle class.
The Biden administration has also maintained that tax cuts should be paid for as part of a proposal, while the 2017 review approved by Trump led to higher budget deficits as promised growth failed to materialize.
Recent economic research indicates that Trump’s corporate tax cuts boosted business investment, but not enough for the additional growth needed to cover the cost of those tax cuts. The Congressional Budget Office estimates that a full extension of the expiring tax cuts would cost $4.9 billion over 10 years, including additional interest on the debt. The federal government’s public debt is almost US$27.6 trillion.
Business leaders argue that lower taxes make them more competitive globally. This allows them to hire more workers and invest in new technologies. This, in turn, would help boost growth.
Cisco and Procter BRT Members & Gamble told reporters on Wednesday that higher rates would cause them to invest less in the U.S.
Jon Moeller, P.&G’s CEO and chairman said a tax increase would likely be passed on to consumers in the form of higher prices, limit employee wage growth and be supported by shareholders.
“Assuming that companies are big and strong and can absorb this is somewhat naive in terms of what will actually happen,” Moeller said. “It’s a social impact.”
Biden’s budget proposal would raise corporate taxes by nearly $2.2 trillion over 10 years. More than half of this new revenue would come from resetting the corporate tax rate to 28% – an increase, though still lower than the 35% rate inherited by Trump.
Trump, however, suggested that higher corporate taxes would devastate the nation itself.
“Biden wants to raise taxes on top of that and raise taxes on corporations, which will lead to the destruction of your jobs and, you know, ultimately, that will just lead to the destruction of the country,” Trump said at a rally in May.
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