Finance Pros OK with Tax Hikes, Says Survey

Over half the financial professionals in a new survey said that tax increases should not be taken off the table in order for Washington to reach a deficit reduction agreement.

The survey, released Thursday by the Association for Financial Professionals, found that financial pros overwhelmingly agree that clear action must be taken on reducing the federal budget deficit to accelerate economic growth next year.

The 2012 AFP Business Outlook Survey found that financial professionals believe the U.S. economy will continue to strengthen modestly in 2012, with a median expected growth rate of gross domestic product of 1.9 percent. Two-thirds of the 741 survey respondents rejected the need for additional fiscal stimulus, such as another round of quantitative easing by the Federal Reserve. While the largest percentage of financial professionals since December 2006 is anticipating that their organizations will add staff to their payrolls in 2012, they are expecting a relatively modest net gain in payrolls of only 1.1 million for the entire U.S. economy.

Financial professionals continue to point to uneven consumer demand, business investment and demand for U.S. goods and services overseas as important factors affecting economic growth and job creation in 2012. They also believe several key factors will influence business conditions in 2012: managing health care costs (76 percent), the federal budget deficit (71 percent), uncertainty surrounding tax policy (71 percent), sovereign debt crisis in Europe (71 percent), weak housing demand (70 percent), and the success of efforts to reduce long-term budget deficits (70 percent).

“CFOs and treasurers are sending a clear message: Enough!” said AFP president and CEO Jim Kaitz in a statement. “These are practical people. They recognize that the political theater must stop in order to achieve a resolution of the debt crisis.”

Internationally, financial professionals also are concerned about the ongoing sovereign debt crisis in Europe. Just over half of the financial professionals surveyed by the AFP indicate that their organization has been affected financially by the sovereign debt crisis in Europe: 35 percent of organizations experienced a detrimental impact, while 18 percent saw a beneficial impact. Nearly half of those surveyed expect dissolution of the euro sometime within the next three years.