More than 160 corporate executives on Tuesday expressed support for including tax-rate increases in a deficit deal, publicly breaking with Republican leaders who have ruled them out.
In an about-face, the CEOs of the Business Roundtable said they now believe any agreement to avoid the tax increases and spending cuts of the “fiscal cliff” must include a combination of revenue increases, spending cuts and entitlement reforms.
The executives said that, after weeks of talks on Capitol Hill and in the White House, they have come to believe that tax increases are the “only way to get to a reasonable compromise,” an outcome that is “more important than sticking to any ideological view,” Cote said.
The Roundtable had previously urged lawmakers to extend all the Bush-era tax rates for another year, but it abandoned that position in a letter to Congress sent on Tuesday. The group said everything, including rate hikes on the wealthy, must be on the negotiating table in order to reach a $4 trillion deficit-reduction deal.
“Compromise will require Congress to agree on more revenue — whether by increasing rates, eliminating deductions or some combination thereof — and the administration to agree to larger, meaningful structural and benefit entitlement reforms and spending reductions that are a fiscally responsible multiple of increased revenues,” the letter said.
The letter drew a swift rebuke from the top Republican tax-writer in the House, Ways and Means Chairman Dave Camp (Mich.).
“Big business may support raising tax rates on small businesses, but I do not,” Camp said in response. “The solution to the fiscal cliff isn’t higher tax rates, which economists agree will destroy hundreds of thousands of jobs for middle-class families.”
Camp and other top Republicans have stood firm against rate increases in a “fiscal cliff” deal, arguing that the tax hikes on income above $250,000 that Democrats are demanding would cripple small businesses.
“Republicans remain committed to finding a balanced solution to the fiscal cliff,” Camp said, “one that involves both savings from substantive entitlement reforms and higher revenues through pro-growth, comprehensive tax reform.”
The Republican chairman wasn’t alone in his criticism. Another prominent trade group, the National Federation of Independent Business (NFIB), blasted the corporate executives and said the nation’s books shouldn’t be “balanced on the backs of small business.”
“It’s easy for big business to point to another group and say, ‘Raise their taxes,’ ” said Dan Danner, president and CEO of the NFIB.
“It’s unfortunate that some business leaders are so cavalier in asking the government to raise taxes on someone else, namely, on small business, while protecting corporate profits and Wall Street.”
The International Franchise Association said the corporate executives are offering up a policy option that will kill jobs.
“The majority of job creation, 65 percent of all net new jobs, comes from the small-business community, including franchise business owners who operate small businesses under the world’s most well-known brands and have been growing at a more rapid rate over the past decade than all other types of businesses,” said IFA President & CEO Steve Caldeira.
But the CEOs said they are attuned to the needs of smaller companies, which are important to their supply chains.
“We work very closely with small and medium businesses; they are very important in the process,” said Jeff Immelt, the chairman and CEO of General Electric.
Still, he emphasized that timing matters and “delaying [action] doesn’t do any good to anybody.
“We’ve been dealing with this much uncertainty for almost two years,” Immelt said.
The CEOs said all the pieces for an agreement are in place and it’s up to leaders to sit down and hammer out a solution to provide the certainty that businesses need to hire and invest.
They said leaders from both parties need to put all their cards on the table and put an end to the political paralysis that has gripped Washington.
If they do, Cote said, the reward will be a “much more robust recovery than anyone has envisioned.”