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Biden's proposed corporate tax hike may 'drive business outside of the US': EY CEO

Alexis Christoforous
·Anchor
·3-min read

EY CEO Carmine Di Sibio has a message for President Biden: Tread carefully when it comes to raising corporate taxes.

“Any raise in the corporate tax would be a threat to U.S. business,” Di Sibio told Yahoo Finance Live. “I do think it would make the U.S. less competitive, and I think the tax rate elsewhere would be more beneficial.”

Biden has promised to roll back former President Trump’s 2017 tax cuts, which Di Sibio said were “very important for Corporate America.”

Trump slashed the U.S. corporate tax rate from 35% to 21%. Biden has proposed increasing that rate to 28%, in addition to a 15% minimum book tax.

“I think President Biden would have to be careful in terms of the corporate tax rate to make sure that we don't drive business outside of the U.S.,” Di Sibio said, adding that it’s important for Biden to “have business as a stakeholder.”

At her Senate confirmation hearing last week, then Treasury Secretary nominee Janet Yellen told lawmakers that the U.S. could absorb higher corporate taxes, as long as it remained competitive with other countries.

“We look forward to actively working with other countries through the [Organization for Economic Cooperation and Development] negotiations on taxes on multinational corporations to try to stop what has been a destructive, global race to the bottom on corporate taxation,” she told lawmakers.

But Yellen was quick to add that Biden wouldn’t move to raise the corporate tax rate until the pandemic was behind us.

Analysts at Bank of America Securities estimate Biden’s tax plan would reduce S&P 500 earnings by 7%, with companies in the tech, health care and communications services industries getting hit the hardest.

While Di Sibio warned that the president’s proposed higher taxes would be “problematic,” he believes Biden’s policies are “pro-business.”

Climate change

Di Sibio suggested that Biden’s proposals to combat climate change are something many companies can get behind.

In one of his first executive orders as president, Biden had the U.S. rejoin the Paris Agreement.

Di Sibio said former Secretary of State John Kerry as Biden’s climate czar, is “someone companies will be able to interact with” to achieve the goals of the Paris accord.

U.S. President-elect Joe Biden listens as former U.S. Secretary of State John Kerry, his special presidential envoy for climate appointee, speaks as President-elect Biden announces his national security nominees and appointees at his transition headquarters in Wilmington, Delaware, U.S., November 24, 2020. REUTERS/Joshua Roberts
U.S. President-elect Joe Biden listens as former U.S. Secretary of State John Kerry, his special presidential envoy for climate appointee, speaks as President-elect Biden announces his national security nominees and appointees at his transition headquarters in Wilmington, Delaware, U.S., November 24, 2020. REUTERS/Joshua Roberts

EY also announced its own climate initiatives, committing to be carbon negative in 2021 and aiming to achieve net zero emissions by 2025. In order to reach those goals, Di Sibio plans to reduce EY’s business travel emissions by 35% over the next four years.

“We are going to travel, but not to the levels that we were in 2019,” he said. “We've learned a lot from the pandemic on how to work virtually.”

Di Sibio is optimistic about the future and believes the economy will be primed to bounce back once we’re through the pandemic.

“We have a lot of pent-up demand,” he said. “And so this analogy of the roaring '20s might be a good analogy. When we talk to our clients, they're all very bullish over the next year or two in terms of their businesses.”

Alexis Christoforous is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AlexisTVNews.

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