ICYMI: ‘Business Roundtable will be putting its full weight behind protecting and strengthening tax reform’

July 10, 2024

Business Roundtable leaders recently held a media roundtable where they detailed the importance of preserving and expanding the economic benefits of tax reform. The Roundtable also announced it will be putting its full weight behind protecting and strengthening pro-growth tax policy, as 2025 approaches.

The discussion was led by Business Roundtable Chair Chuck Robbins, Chair and Chief Executive Officer of Cisco; Business Roundtable Tax and Fiscal Policy Committee Chair Jon Moeller, Chairman of the Board, President and Chief Executive Officer, Procter & Gamble; and Business Roundtable CEO Joshua Bolten.

Here’s what they said:

On Business Roundtable’s tax advocacy plans:

Bolten: “As we look to 2025, when we expect the tax code to be substantially rewritten, an essential element of that work will be to ensure we retain a competitive tax system that allows companies to grow and innovate in the U.S. For the remainder of this year and next, Business Roundtable will be putting its full weight behind protecting and strengthening tax reform. We’re fully energized for this effort, and we’re prepared to spend eight figures over the course of this campaign, among the largest efforts in the 52-year history of the Business Roundtable.”

On Business Roundtable’s 2025 tax policy priorities:

Moeller: “As the Business Roundtable, we have three priorities as we look toward 2025 and the tax discussion. The first is to retain the 21% corporate income tax rate. The second is maintaining a competitive international system. The third is strengthening innovation incentives here in the U.S.”

On the 2017 tax reforms bringing more corporate tax revenue back to the U.S.:

Robbins: “We estimate as a result of [tax reform], $2.5 trillion in international earnings were brought back to the United States, which was obviously very positive. One example of that is the FDII provision, which serves as an incentive for companies like ours to leverage the investments of our U.S.-based R&D resources. … Following the FDII implementation, we moved all of our foreign-based IP back to the United States under the hopeful assumption that that would be a permanent situation that would encourage us to keep it here. And before 2017, just to put it in perspective, Cisco paid 50% of our annual taxes in the United States. Post-2017 tax reform, we pay 90% of our taxes in the United States. So, while it was viewed as a tax cut, it resulted in more dollars flowing into the U.S. in many cases for many companies.”

Moeller: “For Procter & Gamble, in the U.S., we’ve increased investment in manufacturing operations in the U.S. since 2017 by $6 billion. We’ve added 4,000 jobs in the process. We pay more in taxes today than we did in 2017, not less. The specific numbers the year before [tax reform], 2016, we paid $1.5 billion in taxes to the U.S. government. Last year, we paid $2.2 billion. That’s a 47% increase. So, significant investment in domestic manufacturing, significant growth in jobs, more taxes paid, not less taxes paid. That gets much harder to maintain, and certainly gets harder to keep growing if we’re dealing with a higher tax rate, if we’re dealing with an uncompetitive system overseas.”

On how tax reform increased domestic investments in research and development (R&D) and intellectual property (IP):

Robbins: “We’re very much a global company, but 80% of our global R&D spend is in the United States and we’d like to keep it that way. I think at a time where I think everybody wants to see more research and development, innovation and manufacturing in the United States, our policies as a country should reflect that. A hundred percent of our global IP is in the United States. 90% of our global profits are now in the United States. What we can’t have is a tax code that actually puts companies like us that did the right thing in 2017 at a competitive disadvantage on a global basis as we go forward.”

On proposals to raise the corporate tax rate:

Robbins: “If the U.S. were to move to a 25, 26, whatever [rate], if we don’t think that other countries will see that as a competitive opportunity to actually create incentives against the tax increases that would happen here, I think we’d be naïve.”

Moeller: “What happens with a five-point rate increase? That’s a huge delta in terms of the comparison if that were to happen, between the attractiveness of a company investing in the U.S. or making an investment somewhere else. I was the CFO for P&G for 12 years. I’ve run thousands of NPV calculations, and I can tell you for sure that would change decisions in terms of where investments were made.”

Bolten: “Right now the current U.S. tax rate is higher than the average of our developed country competitors. … We take it up to that level [28%] we will be I think … the second worst in the OECD, the second highest tax rate in the world among our competitors. … If you decide that you’re going to tax your companies more than anybody else, you’re putting them at a huge competitive disadvantage because we’re in a global economy and we will lose jobs here in America.”

Learn more in Bloomberg Tax, Semafor, AP News, Yahoo Finance, Punchbowl News, the Wall Street Journal and POLITICO.