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Politics Corporate America wants to avoid higher taxes and social issues. That's not likely to happen.

16:40  10 april  2021
16:40  10 april  2021 Source:   businessinsider.com

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Joe Biden wearing a suit and tie: President Joe Biden. Alex Wong/Getty Images © Provided by Business Insider President Joe Biden. Alex Wong/Getty Images
  • For years, America's biggest companies have steered clear of politics, except for hefty donations.
  • Now, there's more of an expectation for them to speak out, just as they face a big tax increase.
  • Companies probably don't want a tax increase, and seem mixed on responding to it.
  • See more stories on Insider's business page.

Corporate America is going through growing pains on political activism - but it's still trying to fight off higher taxes. In the Biden era, the two may go hand in hand.

Long apolitical, the dynamic that emerged during the Trump years of big business weighing in on hot-button social issues has, if anything, accelerated in 2021, as reflected in the recent corporate outcry against Georgia's recent legislation to restrict voting rights.

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At nearly the same time, corporate America has been far less aligned with the progressive agenda of funding a large infrastructure and jobs plan with a boost to the corporate tax rate. In fact, only fours ago, in 2017, the business community cheered its biggest win on taxes in decades under former President Donald Trump, when the corporate rate was slashed from 35% all the way down to 21%.

As part of his $2.3 trillion infrastructure package. Biden wants to jack the corporate tax rate up to 28%. It represents a hit to corporate profits and many influential business groups are staunchly opposed to it, along with congressional Republicans.

The Chamber of Commerce's chief policy officer, Neil Bradley, said the organization "agrees with the Biden administration that there is a great need to invest in American infrastructure and that 'inaction is simply not an option.'" However, he added, "that doesn't mean we should proceed with tax hikes that will hurt American businesses and cost American jobs."

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And Josh Bolten, chief executive officer of Business Roundtable, told Bloomberg TV on Thursday that Biden should stick with "real infrastructure" like roads and bridges - and he was "strongly against" the corporate tax hike.

Some individual business leaders are coming out in favor of Biden's tax increase. Amazon CEO Jeff Bezos has said that the company is supportive of a rise in the corporate tax rate, although he didn't specify what rate he supports. Lyft president and cofounder John Zimmer has thrown his support behind the 28% rate.

Many other companies are staying tight-lipped about how, exactly, they feel - while perhaps complaining in private, as reported by Politico.

Jeff Bezos wearing a suit and tie: Amazon CEO Jeff Bezos. Alex Wong/Getty Images © Alex Wong/Getty Images Amazon CEO Jeff Bezos. Alex Wong/Getty Images

Corporate taxes seen as a 'less charged issue'

The corporate response on taxes is a sharp break from the outcry over Georgia. An open letter from 72 Black executives last week was quickly followed by another joint statement from over 170 business leaders urging state lawmakers against "imposing barriers that result in longer lines at the polls or that reduce access to secure ballot dropboxes."

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Companies in the latest letter included Microsoft, HP and Dow.

Vanessa Burbano, an assistant professor of management at Columbia Business School, said the phenomenon of companies taking political stances is relatively new. She said what companies do choose to speak out publicly about varies - although a handful of companies releasing their own statements does put pressure on others.

Doug Schuler, a professor of business and public policy at Rice University, argued the letter from Black CEOs opened the door for other prominent business figures to take a similar step.

He told Insider that his sense of what CEOS were trying to do was "to make statements to their customers, to their workforce, and perhaps investors they are sensitive to these social issues - it's an issue they should be on the right side of."

Agreeing to pay more in taxes to fund Biden's plan to "build back better," though? Many CEOs don't want to be on the right side of that.

The corporate tax rate is "a less charged issue than some of the others that we've seen companies take stances on in the past, like including what happened in Georgia, including things related to immigration or LGBTQ rights or things like this that are sort of influence the individual stakeholder much more directly," Burbano said.

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Don Beyer sitting on a table: Rep Don Beyer. Courtesy of Rep. Beyer © Courtesy of Rep. Beyer Rep Don Beyer. Courtesy of Rep. Beyer

Politicians are also divided

Sen. Joe Manchin, a moderate Democrat who's a key vote in the Senate, has expressed his concerns over raising the rate to 28%. He's more in favor of a 25% rate - and his support will prove pivotal to the eventual passage of any plan as Democrats grapple with slim majorities in Congress.

"Claims that American businesses cannot compete with a corporate tax rate above 28% ignore the clear and indisputable evidence to the contrary," Rep. Don Beyer (D-VA), Chairman of the US Congress Joint Economic Committee and member of the House Ways and Means Committee, said in a statement to Insider.

He added: "It's good to see support for a reasonable increase in the rate from business leaders as well as former top Republican economic adviser Gary Cohn," referring to remarks made just last year by Trump's former National Economic Council director that, actually, 28% would have been a decent place to arrive at in the 2017 tax law.

Republicans have repeatedly made their opposition to tax hikes clear. Top Republicans also blasted companies for wading into the country's hot-button issues like voting rights.

"From election law to environmentalism to radical social agendas to the Second Amendment, parts of the private sector keep dabbling in behaving like a woke parallel government," Senate Minority Leader Mitch McConnell said in a statement. "Corporations will invite serious consequences if they become a vehicle for far-left mobs to hijack our country from outside the constitutional order."

Experts like Schuler said large companies won't weigh into every social issue unless the pressure to do so becomes impossible to cast aside. He pointed out that large businesses hadn't weighed in on another set of proposed voting restrictions in Texas.

"To some extent, I think businesspeople want these issues to go away," he said. "They hate it when the spotlight is on them."

Read the original article on Business Insider

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