Trump proposes corporate tax cuts; Biden’s team promotes support for global alliances

Former U.S. President Donald Trump recently spoke to an influential group of CEOs, expressing his desire to further reduce the corporate tax rate, which he initially lowered during his tenure. Concurrently, President Joe Biden’s chief of staff, Jeffrey Zients, emphasized the benefits of Biden’s focus on global alliances for their businesses.

Both Trump and Zients met privately with the Business Roundtable in Washington on Thursday. Zients filled in for Biden, who was attending the Group of Seven leaders’ summit in Italy. This prominent group, representing over 200 CEOs, is advocating to preserve the business tax breaks established by Trump in 2017.

No official comments were made about the meeting’s discussions, but it’s clear that Biden and Trump have starkly different perspectives on taxes and the economy as they head towards a potential 2020 rematch.

Trump proposed cutting the corporate tax rate to 20%, according to an anonymous source familiar with the meeting. His remarks centered on taxes, inflation, and the need for increased oil production.

Meanwhile, Zients highlighted that America’s strong global reputation and independent institutions, like the Federal Reserve, foster trust that helps U.S. capitalism thrive. This was a subtle critique of Trump, who had previously imposed tariffs on allies and sought greater control over Fed policies. Zients also credited the post-pandemic economic recovery to the Biden administration’s collaboration with businesses on supply chain issues. He suggested that Trump’s plans to deport millions and initiate potential trade wars could increase inflation.

The Business Roundtable has prioritized maintaining low taxes and announced a $10 million campaign to keep the corporate tax rate at 21%, promote business-friendly tax code changes, and extend tax incentives for research and development.

Some of the 2017 tax cuts are set to expire after 2025, likely leading to higher taxes for most U.S. households. This sets up a clash between Democrats and Republicans on how to revise the tax code. Both parties aim to preserve cuts for those earning under $400,000, but Trump supporters want to expand tax cuts, including for corporations. Biden proposes raising the corporate rate to 28% and increasing taxes on the wealthy to fund middle-class programs.

Biden’s administration insists that tax cuts should be offset by funding sources, whereas the 2017 tax overhaul under Trump resulted in increased budget deficits as the expected growth didn’t materialize. Recent studies show Trump’s corporate tax cuts did spur business investment, but not enough to cover the cost. The Congressional Budget Office estimates that extending the expiring tax cuts would cost $4.9 trillion over a decade, including additional interest on debt, with the federal debt standing at nearly $27.6 trillion.

Business leaders argue that lower taxes enhance global competitiveness, enabling more hiring and technological investments, thereby boosting growth. CEOs from Cisco and Procter & Gamble warned that higher taxes would reduce U.S. investments.

Jon Moeller, CEO of Procter & Gamble, said a tax increase would likely result in higher consumer prices, limited wage growth, and affect shareholders, stressing that assuming companies can easily absorb such costs is naive and has broader societal impacts.

Biden’s budget proposal includes nearly $2.2 trillion in corporate tax increases over ten years, with more than half coming from raising the corporate tax rate to 28%, still lower than the 35% rate before Trump’s cuts. Trump argues that higher corporate taxes would harm the economy, warning that Biden’s tax plans could destroy jobs and ultimately harm the country.