WASHINGTON (AP) — President Joe Biden’s chief of staff argued Thursday to an influential group of CEOs that the Democratic incumbent’s emphasis on global alliances would help their businesses, even as the group moves to reverse the tax cuts that former President Donald Trump signed, to be retained in law.
Both Trump, the presumptive Republican nominee, and Jeffrey Zients met behind closed doors with the Business Roundtable in Washington, with Zients standing in for Biden during the president’s meetings with Group of Seven leaders in Italy. Neither side publicly commented on what was said at the meeting, which comes as Biden and Trump head toward a 2020 rematch with starkly different views on taxes and the economy.
A person familiar with the conversation said Zients argued that America’s global reputation and its independent institutions like the Federal Reserve fostered the kind of trust worldwide that allowed American capitalism to flourish. The statements were a joke in Trump’s camp, as the former president had previously hit allies with tariffs and sought more control over Fed policy.
Zients said the economic recovery from the pandemic was possible in part because the Biden administration worked with the business community on issues like supply chains, the person said. And he signaled to CEOs that Trump’s promises to deport millions of people and wage potential trade wars could drive up inflation. The person insisted on anonymity to discuss details of the meeting because he was not authorized to do so publicly.
The Business Roundtable has made low taxes its top legislative priority. The group announced it would spend at least $10 million on a campaign to keep the corporate tax rate at 21%, as well as promote business-friendly changes to the U.S. tax code and push for expansion of tax incentives for research and development.
Some of the 2017 tax cuts that Trump signed into law during his presidency will expire after 2025, likely raising taxes for most American households. That sets up a showdown between Democrats and Republicans over how to rewrite the tax code.
Leaders from both parties want to keep the cuts for those making less than $400,000. But some Trump supporters want to expand tax cuts, including for corporations. Biden would like to raise the corporate rate to 28% and implement higher taxes on the wealthy to fund programs for the middle class.
The Biden administration has also insisted that tax cuts must be paid for as part of a proposal, while the 2017 overhaul approved by Trump led to higher budget deficits as promised growth failed to materialize.
Recent economic research shows that Trump’s corporate tax cuts have boosted business investment, but not enough to generate the additional growth needed to cover the costs of those tax cuts. The Congressional Budget Office estimates that a full extension of the expiring tax cuts would cost $4.9 trillion over 10 years, including additional interest on the debt. The federal government’s national debt is almost $27.6 trillion.
Business leaders argue that lower taxes make them more globally competitive. This allows them to hire more employees and invest in new technologies. This in turn would help boost growth.
BRT members from Cisco and Procter & Gamble told reporters Wednesday that higher tariffs would cause them to invest less in the U.S.
Jon Moeller, CEO and chairman of P&G, said a tax increase would likely be passed on to consumers in the form of higher prices, limit wage growth for workers and be borne by shareholders.
“Making the assumption that companies are big and strong and can absorb this is quite naive when it comes to what will actually happen,” Moeller said. “It is a social impact.”
Biden’s budget proposal would raise corporate taxes by nearly $2.2 trillion over 10 years. More than half of that new revenue would come from resetting the corporate tax rate to 28% — an increase, though still lower than the 35% rate Trump inherited.
Trump, meanwhile, has suggested that higher corporate taxes would destroy the nation itself.
“Biden on top of that wants to raise taxes and raise corporate taxes, which will lead to the destruction of your jobs and, you know what, ultimately it will just lead to the destruction of the country,” Trump said at a rally in Can.
