Two-thirds of tax and finance executives believe the Presidential candidates are not spending enough time addressing tax issues, according to a new survey by Ernst & Young.
That may be surprising, as there seems to have been endless talk about the so-called Buffett Rule and Mitt Romney's income tax rate.
“In the last few weeks, the tone of campaigns has picked up on the need to focus on tax, yet corporate America is still waiting for a focus on critically important aspects of both domestic and international tax treatment,” said E&Y Americas vice chair of tax services Kate Barton in a statement. “Perhaps one reason to avoid the complexity comes from fear of failure. In fact, 72 percent of respondents believe the issue of tax reform will not be addressed until 2013 to 2014.”
The survey findings, announced Wednesday at Ernst & Young LLP’s Seventh Annual Domestic Tax Conference, indicated that 41 percent of the 2,000 tax and finance executives polled believe that tax reform is beginning to gain traction, with 25 percent of them actively engaging in the discussion. However, nearly an equal amount of the tax and finance executives surveyed, 27 percent, are taking a “wait and see” approach given the belief it has not yet achieved enough footing to warrant action. More than half of them, (54 percent, agree that legislative developments, such as tax reform, and regulatory developments, such as uncertain tax positions, surrounding tax will remain a top area of focus for the CEO, COO, audit committee and board of directors.
When respondents were asked how the U.S. international tax regime would look in five years based on what they are hearing from the candidates and current administration, 34 percent anticipate a lower corporate tax rate and a move to a territorial system, up from 17 percent last year, while 36 percent foresee a lower corporate tax rate within a worldwide system. Still, 26 percent of the survey respondents felt the status quo would remain, with the same tax rates and the same worldwide system.
When asked how often the tax department meets with the C-suite, audit committee and/or board of directors, fewer than half (42 percent) of the survey respondents said they meet with them frequently and at regular intervals.
“I can’t over-stress how important it is for tax to have a ‘seat at the table’ in business discussions,” said Barton. “Tax executives should be called upon to explain and manage the changing enforcement landscape, help management understand potential reforms, and assist with general business planning. Effectively integrating tax leadership in all aspects of the company’s strategy is absolutely vital.”
