U.S. business leaders are keeping a close eye during primary season on the candidates’ tax reform plans, according to a new survey of private companies by PricewaterhouseCoopers.
PwC’s recently released quarterly Trendsetter Barometer survey asked private companies about the impact of the upcoming elections on their businesses, and the main priorities they have. Tax reform ranked as the biggest election-season issue by far for the companies surveyed by PwC in the fourth quarter. Seventy percent said tax reform is important for their businesses.
“Tax reform has gotten a lot of attention over the last several years, but not a lot of traction in the legislative process,” said PwC Private Company Services partner Ken Esch. “Tax reform means different things to different people. At this stage, there’s still some discussion on corporate tax reform. But when we talk about the Trendsetter companies, the issue of tax reform really jumped to the top of the list and has broad support across the board. Seventy percent told us tax reform is important for their business, but 58 percent of them also told us that tax reform is important for the economy, which shows this is still a key issue and is very important to businesses. While there has been talk in the past about tax reform, the time is probably right for Congress to take up this topic.”
He noted that tax reform goes beyond lowering taxes. “Simplification of the tax code is important, and attention to businesses being treated equally among one another,” Esch told Accounting Today. He has also written a LinkedIn post about the survey results.
In second place behind tax reform was increased capital availability, with 52 percent of the companies surveyed by PwC saying it was important for their own company’s growth, and 45 percent saying it’s critical to U.S. economic growth.
“In our fourth quarter survey, companies were telling us that they’re going to spend money on improving their businesses, even though there were concerns about the economy overall, and they’re looking to debt financing for example as a way to make those investments,” said Esch. “The good news is they told us in the fourth quarter their interest rates were less than 3.5 percent, which is a historic low for the Trendsetter companies. The low interest rate environment that they’re experiencing today is helpful for them to make investments, and they’re telling us that availability of capital is going to help them fuel their growth prospects in the future.”
Infrastructure spending was cited as critical to the economy by 56 percent of the respondents to PwC’s Trendsetter survey.
“When we look at the infrastructure spending for these types of businesses, it can mean many different things,” said Esch. “It can mean things like access to ports for exports or for imports or for products in their supply chain. It can mean the roads and bridges that are used to distribute their products. It can mean airports for travel and for companies providing service. Across the board they feel that infrastructure spending is important for their business as well as for the overall economy.”
Increased manufacturing incentives in the U.S. also drew strong support from the business leaders surveyed by PwC. Sixty percent rated manufacturing incentives as very important for national economic growth, and 49 percent identified it as important for their own company’s growth.
“There’s a general recognition of the importance of manufacturing to the overall economy,” said Esch. “They tie it to higher-paying jobs. Having that manufacturing base in the U.S. is important for them to be able to sell products and services to people who have higher income. We have been seeing over the last several years more manufacturing coming back to the U.S. from some of the lower-cost jurisdictions. We’ve seen that wages in those areas have been rising and the cost to ship products from those locations to serve the U.S. customer has been increasing. Many of our clients are telling us that their customers want shorter lead times to receive products. To have that manufacturing located closer to their customer base here in the U.S. is very important to them and helps shrink their supply chain in distance as well as cost and time associated with delivering the products.”