Business Leaders in Davos: Tax Reform Gives U.S. a Competitive Edge

January 25, 2018

Business Roundtable CEOs took to the global stage of the World Economic Forum this week to highlight the many benefits of the new U.S. tax law, including more investment, new jobs and greater economic growth.

“I think it’s possible you’re going to hit 4 percent sometime this year,” said Business Roundtable Chairman Jamie Dimon said in a CNBC interview at the forum in Davos, Switzerland. “I promise you, we are going to be sitting here in a year and you all will be worrying about inflation and wages going up too high.”

“The real benefit comes over time. Competitive taxes [will lead to] more capital, more jobs, more companies investing here,” added Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co.

About 25 Business Roundtable CEOs are attending the forum’s annual meeting, which draws thousands of leaders from politics, business and culture to discuss global trends.

The CEOs pointed to another positive result of the 2017 tax bill: making the United States more attractive for investment.

“There are companies all around the world who are looking at the U.S. now and saying, ‘This is the place to be in the developed world,’” said Stephen Schwarzman, Chairman, CEO and Co-Founder of the investment firm, Blackstone. “

“There are going to be a lot of flows into the United States,” he added in a panel discussion, “Global Markets in a Fractured World," with fellow Business Roundtable members, Adena Friedman, President and CEO, Nasdaq, Inc.; and Brian Moynihan, Chairman and CEO of Bank of America Corporation.

“It is definitely a growth driver for the United States, and it is making it so that when you are doing business around the world, the United States doesn’t get disadvantaged by having a much higher tax rate,” Friedman said.

The 2017 tax bill lowered the federal corporate tax rate from 35 percent to 21 percent. The Tax Cuts and Jobs Act also moved to a system of international taxation that encourages U.S. companies to return earnings to the United States.

“Think about large global companies: They can go anywhere,” Moynihan said. “They think the U.S. is the place to talk about investing in the next 12 to 18 months.”

Many other CEOs raised the tax issue in panel discussions and interviews:

Mark A. Weinberger, Global Chairman and CEO, EY, and Chair, Business Roundtable Tax and Fiscal Policy Committee

“This is a landmark tax reform bill that structurally changes business taxes that we haven’t even done since the 1960s…. International rules were written in the ’60s. This completely changes how a company thinks about where to put its capital. It’s not just U.S. businesses, we’re talking to many Asian companies, European companies who are looking to invest in the U.S. to get advantage of the full expensing, the lower corporate rate, and a number of other benefits.” (Fox Business)

Cathy Englebert, CEO, Deloitte US

“What’s really important is the U.S. competitiveness in the global economy. I think you’re seeing some of the results of that: What a difference a year makes around the optimism that we see out there with CEOs.” (Fox Business)

Michael Corbat, CEO, Citigroup Inc.

“We think this is going to be a catalyst for spending, investment. I think people are underestimating the impact of repatriation, and not just money coming back but money moving around the world and how that’s going to be put to work… What it means to our consumer bank and the consumer wallet and the fact that people are going to have a bit more in take-home (pay). We’ve seen a consumer that’s in pretty good shape.” (CNBC)