Trump and Biden’s Chief of Staff Present Diverging Tax Plans to CEOs

In a pivotal meeting with the Business Roundtable, former President Donald Trump and President Joe Biden’s chief of staff, Jeffrey Zients, presented starkly contrasting economic visions to a group of influential CEOs. Trump reiterated his intention to lower the corporate tax rate further if re-elected, while Zients underscored the importance of global alliances and economic stability under the current administration.

The closed-door discussions, which took place on Thursday in Washington, came as Biden attended meetings with Group of Seven leaders in Italy. The Business Roundtable, representing over 200 CEOs, recently launched an initiative to maintain the corporate tax cuts enacted by Trump in 2017.

Although neither Trump nor Zients publicly commented on the meeting, sources familiar with the discussions provided insights. Trump expressed his desire to reduce the corporate tax rate from 21% to 20%, focusing on issues such as inflation and increased oil production. Conversely, Zients highlighted the Biden administration's efforts in fostering global trust and stability, which he argued were essential for U.S. capitalism.

Zients pointed out that the Biden administration’s cooperative approach with businesses on supply chain issues had facilitated post-pandemic economic recovery. He warned that Trump’s policies, such as potential mass deportations and trade wars, could exacerbate inflation. These claims were based on insights from a person briefed on the meeting.

The Business Roundtable has prioritized low taxes, announcing a $10 million campaign to maintain the 21% corporate tax rate and advocate for business-friendly tax reforms. With parts of the 2017 tax cuts expiring after 2025, a legislative battle looms over the future of the tax code. Both parties aim to protect tax cuts for those earning under $400,000, but opinions diverge on corporate taxes. Trump supporters seek expanded corporate tax cuts, while Biden proposes raising the corporate rate to 28% to fund middle-class programs.

The Biden administration contends that tax cuts should be offset, contrasting with the 2017 overhaul, which led to increased deficits. Economic research indicates that while Trump’s corporate tax cuts did boost investment, they did not generate sufficient growth to offset the revenue loss. The Congressional Budget Office projects that extending the expiring tax cuts would cost $4.9 trillion over a decade, including added interest on the debt. Currently, the federal government’s publicly held debt stands at nearly $27.6 trillion.

Business leaders argue that lower taxes enhance global competitiveness, allowing for job creation and technological investment, which drives growth. However, executives from companies like Cisco and Procter & Gamble warn that higher rates could deter investment in the U.S. P&G CEO Jon Moeller noted that increased taxes might lead to higher consumer prices, limited wage growth, and impact shareholders.

Biden's budget proposal aims to raise corporate taxes by nearly $2.2 trillion over ten years, with more than half of the revenue from increasing the corporate tax rate to 28%, still lower than the 35% rate before Trump’s tenure. Trump argues that such tax hikes would devastate the economy.

At a recent rally, Trump stated, "Biden wants to raise taxes on top of that and raise business taxes, which will lead to the destruction of your jobs and, you know what, ultimately it’s just going to lead to the destruction of the country."

Why This Matters: This ongoing debate over corporate tax rates is crucial for the economic landscape, influencing business investments, job creation, and the broader economic recovery. The outcome will have significant implications for both U.S. competitiveness on the global stage and domestic economic stability.

Key Takeaways

• Trump aims to reduce the corporate tax rate to 20% if re-elected.
• Biden’s administration emphasizes global alliances and economic stability.
• The Business Roundtable is campaigning to maintain the current 21% corporate tax rate.
• Economic research suggests Trump's tax cuts increased investment but not enough to cover revenue loss.
• Biden's budget proposal includes raising the corporate tax rate to 28%.