The chief executive officer of Raytheon Technologies Corp. predicts President Joe Biden’s proposed corporate income tax hike to significantly increase infrastructure spending would force him to cut investments by a fifth.
In an interview with the Washington, DC Economic Club on Wednesday, CEO Greg Hayes tabled a business case against the Biden administration’s efforts to reshape tax policy and reverse tax legislation passed by a Republican Congress and President Donald Trump in 2017 has been.
Hayes also chairs the tax and fiscal policy committee of the Business Roundtable.
David Rubenstein, President of the Washington, DC Economic Club, asked Hayes in a nearly hour-long interview about Biden’s infrastructure plan, taxes, and a number of other topics.
Raytheon allocates $ 5 billion annually to investment and research and development, according to Hayes. The president’s proposal to raise the corporate tax rate from 21% to 28% would cost aerospace and defense giants about $ 1 billion in taxes annually, he said.
“That’s a billion less than I would otherwise invest,” said Hayes. “I have to reduce my investment budget by 20%. I’m not sure that is exactly what the President wants. “
“It’s a pretty straightforward discussion in my eyes,” he said. “If US companies want to invest in technology and innovation, they must have incentives to do so here in the US.”
Legislation in 2017 lowered the corporate tax rate from 35% to 21%, and Hayes said he “drove cash back into the US, it drove investments”.
Raytheon reported $ 8.8 billion on its balance sheet at the end of 2020, of which approximately $ 3 billion from divestments from its business portfolio. Hayes said in January the company would raise dividends and plan a share buyback.
“We don’t think we need $ 9 billion on the balance sheet,” he told industry analysts.
Hayes took on a high profile assignment in 2017 when he joined 15 other top executives calling on Congress to cut corporate taxes in exchange for companies bringing home trillions of dollars parked overseas to avoid higher taxes.
The analyst Nicholas Heymann of William Blair & Co. said in a customer announcement on Wednesday that the tax cut of 2017 “did not increase US growth as promised”. The “vast majority” of corporate tax breaks were returned to shareholders in the form of dividends and buybacks, he said.
US multinational corporations paid an effective tax rate of 8% on average in 2018, half the tax rate of 2017 “and well below the average tax rate for US citizens,” Heymann said.
Corporations are estimated to benefit, directly or indirectly, from Biden’s infrastructure and pandemic aid funds of an estimated $ 2.5 trillion to $ 3 trillion in eight years, he said. You will be asked to pay approximately $ 2 trillion over 15 years to fund the infrastructure program. Personal tax increases for higher incomes and wealthy taxpayers pay the rest, Heymann said.
Jeff Bezos, CEO of Amazon, has approved Biden’s tax plan. In a statement on Tuesday, he said infrastructure spending “will require concessions on all sides – both in terms of the details of the benefits included and the way they are paid for (we support a corporate tax increase). “
Hayes denied Bezos’ testimony.
“I think when you have $ 180 billion it’s easy to say,” he said. “But my shareholders would tell you we want to invest wisely, but we have to do it as much as we can.”
Raytheon had sales of $ 56.6 billion in 2020. Amazon had sales of $ 386 billion in 2020.
The National Association of Manufacturers said Thursday’s proposed tax hike would result in the loss of 1 million jobs in the first two years, economic activity would decline by $ 117 billion by 2023, and investment in equipment and structures would decrease by 2023 $ 80 billion is down.
“As we emerge from the economic disaster caused by COVID-19, American companies are at a crucial point in our country’s history,” said Jay Timmons, president and CEO of the manufacturing group.
Stephen Singer, Hartford Courant (TNS)