Business executives pessimistic about tax reform

By Bernie Becker - 02/19/13 12:54 PM ET

Business tax executives have grown increasingly pessimistic that a broad rewrite of the tax code will happen this year, according to a new survey.

Just a handful of the 163 executives polled believe that Washington will finish off tax reform this year – down from around three in 10 who believed that a year ago. Around seven in 10 believe that Congress won’t pass any significant tax legislation in 2013.

In all, 35 percent of the executives believe tax reform won’t happen until after 2015, and 7 percent don’t expect it to ever happen.

The poll, from Miller and Chevalier and the National Foreign Trade Council, also found that businesses were concerned that Washington would get rid of tax breaks they use without a corresponding drop in rates.

Businesses worry about potential changes to how their offshore operations are taxed, and the current corporate tax rate that currently maxes out at 35 percent.

“The leading concern of business tax executives is that in light of the current political and fiscal environment, Congress could enact revenue offsets to fund other legislative initiatives rather than to fund changes to make the U.S. tax system more competitive,” the poll’s executive summary said.

The poll comes as Democrats and Republicans are in midst of yet another fiscal fight, with billions of dollars in automatic spending cuts set to take effect.

Democrats want to use some revenues to roll back those cuts, but Republicans have said the tax increases in the recent “fiscal cliff” deal are all the tax increases they will allow. Both sides are trying to blame the other for the spending cuts, commonly known as the sequester.

The two chairmen of the congressional tax writing committees – House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.) – are trying to lay the groundwork for a tax overhaul.

But the business executives cited a range of reasons why they don’t believe tax reform will happen this year – including the different priorities of Republicans and Democrats, a perceived lack of interest from President Obama and a lack of consensus from the public about tax reform.