Wednesday, December 2, 2015

CEO's Not Happy About Next Few Quarters-Frustrated with Slow Pace of Tax Reform!

Corporate tax rate is at 35% and CEO's are frustrated! So frustrated they might just slow down on investments in the near term.  According to a report released by the Business Roundtable from 74.1 to 67.5. CEOs are concerned about volatile global markets and the lack of movement on tax reform.

Corporate tax reform is an important issue that helps companies grow and hire employees. When offered more competitive tax rates overseas by hungry countries many large companies moved their headquarters to other shores in an effort to dodge U.S. tax bills.

We can argue about it and get upset but.....the problem is that we are in a global world and this means we don't have captive companies. Companies can put their headquarters just about anywhere they want while retaining the ability to manage  large global networks. When push comes to shove----- they can leave.

This is bad news for investment. Creating the right framework for growth means reforming the tax rate in a way that encourages further investment in the U.S. Politicians are squandering an opportunity to get it right and set up a new tax structure that attracts businesses, encourages greater investment and fosters a stronger labor market.

It is also an opportunity to expand employment and raise wages. Sounds counter productive doesn't it? However, if the tax rate goes down, companies invest their differences in expanded operations to take advantage of the investment environment, foreign companies become attracted to improving business prospects and qualified labor moves into a demand position.

Combining hot topics such as reforming the public education system and encouraging higher education innovation could further developing higher skilled workers that command higher wages. It would be an important goal to increase investment, raise wages, and improve the demand for American workers. It is possible to support corporate needs while enhancing labor through tax reform.

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