WASHINGTON — President Joe Biden’s chief of staff argued to an influential group of CEOs Thursday that the Democratic incumbent’s emphasis on global alliances would help their businesses, even as the group rolls out an effort to preserve tax cuts that former President Donald Trump signed into law.
Both Trump, the presumptive Republican nominee, and Jeffrey Zients met behind closed doors with the Business Roundtable in Washington, with Zients stepping in for Biden during the president’s meetings with Group of Seven leaders in Italy. Neither side commented publicly on what was said in the meeting, which comes as Biden and Trump head toward a 2020 rematch with sharply different views on taxes and the economy.
A person familiar with the conversation said Zients made the case that America’s global reputation and its independent institutions such as the Federal Reserve fostered the kind of trust worldwide that allowed U.S. capitalism to thrive. The statements were a jab at Trump’s camp, as the former president had previously hit allies with tariffs and sought greater control over Fed policies.
Zients said the post-pandemic economic recovery was possible in part because the Biden administration worked with business on issues such as supply chains, the person said. And he indicated to the CEOs that Trump’s pledges 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, having not been authorized to do so publicly.
The Business Roundtable has made low taxes its top legislative priority. The group announced that 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 to extend tax incentives for research and development.
Part of the 2017 tax cuts that Trump signed into law while president are expiring after 2025, likely raising taxes for most U.S. households. That sets up a showdown between Democrats and Republicans about how to rewrite the tax code.
Leaders from both parties want to preserve the cuts for those making under $400,000. But some Trump backers want to expand the tax cuts, including for companies. Biden would like to raise the corporate rate to 28% and introduce higher taxes on the wealthy in order to fund programs for the middle class.
The Biden administration has also maintained that tax cuts should be paid for as part of a proposal, while the 2017 overhaul approved by Trump led to higher budget deficits as the promised growth did not materialize.
Recent economic research indicates that Trump’s corporate tax cuts did boost business investment, but not by enough for the additional growth needed to cover the cost 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 publicly held debt stands at nearly $27.6 trillion.
Business leaders argue that lower taxes make them more competitive globally. That enables them to hire more workers and invest in new technologies. This, in turn, would help boost growth.
BRT members from Cisco and Procter & Gamble told reporters Wednesday that higher rates would cause them to invest less in the U.S.
Jon Moeller, P&G’s CEO and board chairman, said a tax increase would likely be passed on to consumers in the form of higher prices, limit wage growth for employees and be borne by shareholders.
“Making the assumption that companies are big and strong and they can absorb this, that’s kind of naive in terms of what will actually happen,” Moeller said. “It’s a societal 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 at 28% — an increase, though still lower than the 35% rate Trump inherited.
Trump, meanwhile, has suggested that higher corporate taxes would ravage the nation itself.
“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,” Trump said at a rally in May.