Businesses and Chamber of Commerce laud Trump tax reform proposal

Under Trumps proposals, American companies would move from being the most highly taxed among the Group of 20 countries to among the lowest.

Carlos Barria—Reuters
U.S. Secretary of the Treasury Steven Mnuchin discusses the Trump administration's tax reform proposal in the White House briefing room in Washington

WASHINGTON, D.C. — U.S. businesses, particularly small ones, would reap big benefits if President Donald Trump’s plan to cut corporate tax rates becomes law, the U.S. Chamber of Commerce said Wednesday.”As an advocate for pro-growth tax reform, the U.S. Chamber welcomes the White House’s strong push today to advance tax reform,” said Chamber of Commerce President and CEO Thomas J. Donohue. “We’ve got a once-in-a-generation chance to do tax reform, and if we do it right, it can be the single most important step our leaders take to drive economic growth.”Under Trump’s proposals, American companies would move from being the most highly taxed among the Group of 20 countries to among the lowest. Tax rates would fall below those of neighboring Mexico and Canada, which Trump has accused of shortchanging the United States in trade deals.Corporate leaders and business lobbying groups such as the U.S. Chamber of Commerce on Wednesday cheered the administration’s tax proposals, while allowing that the initial one-page plan left out crucial details.The tax plan, which includes a cut in taxes on public companies to 15 percent from 35 percent, does not detail cuts in spending that would help keep the budget deficit under control.AT&T Corp Chief Executive Randall Stephenson welcomed the tax plan but cautioned “the practical reality of getting to 15 percent is you have to get yourself reconciled to some level of deficits for a period of time as you get the economic stimulation.”Big U.S. companies have nearly $1.8 trillion in cash stockpiled overseas, according to Moody’s Investors Service. Technology powerhouse Apple Inc has more than $200 billion of that total.Apple did not immediately respond to a request for comment on Wednesday, but Chief Executive Officer Tim Cook has said the company was looking to bring back offshore cash if tax rates for doing so were lower.”What we would do with it, let’s wait and see exactly what it is, but as I’ve said before we are always looking at acquisitions,” Cook told investors on the company’s first-quarter earnings call in January.Cook’s comment points to a big unknown for the White House and congressional Republicans, who have said business tax cuts would result in more and better jobs.Under pressure from shareholders, listed companies have set high targets for return on invested capital. General Motors Co , for example, has told investors it is aiming for 20 percent returns on its capital investments.Many U.S. companies have been tightfisted about investing in new plants and equipment following the last recession, which left them wary of becoming overextended. Through the last two years of the Obama administration investment in new equipment has flatlined, according to government data.The financial impact of the White House tax plan will vary widely by company and business sector. A proposal to cut inheritance taxes, for example, is of high interest to small businesses which are often family-controlled enterprises.Many companies already pay less than the headline 35 percent tax rate. Companies in the S&P 500 index paid an average tax rate of 29.06 percent for 2016, Standard and Poors said.A change of a few percentage points in tax rates can make a big difference. Aircraft maker Boeing Co on Wednesday reported a 19 percent increase in first quarter profits, partly because of a 4 percentage-point drop in its tax rate.”At the highest level we’re a big supporter of tax reform,” Boeing Chief Financial Officer Greg Smith told analysts and journalists on a call Wednesday. “It’s going to drive jobs, it’s going to drive the U.S. economy broadly speaking and it’s going to allow us to compete.”Boeing has been cutting jobs in the United States, warning employees last week that it planned another round of cuts that would eliminate hundreds of engineering jobs.Reuters News Service contributed to this report.