Video: With “fiscal cliff” looming, nation’s chief executives are seeking to set priorities while conceding that some taxes will have to go up.
With corporate tax rates and tax breaks up for grabs, chief executives are personally stepping forward to lobby Congress and the White House on taxes, seeking to set priorities while conceding that some taxes will have to go up.
The business executives, while unenthusiastic about higher taxes, say that avoiding the “fiscal cliff” is their No. 1 priority and that many other key issues can be taken care of in broader tax reform negotiations they hope would take place next year.
What going over the 'fiscal cliff' would mean . . .
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“Most have focused less on the particulars of a tax agreement and more on just the need to get something done to provide certainty,” said Rep. Chris Van Hollen (Md.), the ranking Democrat on the House Budget Committee.
The executives have been coming in waves, starting with a group brought in by Democrats last week to help push Republicans closer to making a deal. Although many of them supported GOP presidential candidate Mitt Romney, who opposed tax hikes, the executives are now ready to swallow higher rates for the wealthy and are leaning on both parties to compromise.
“The idea that you’re going to go over the cliff and work it out later, that is not really thinking about your customers,” said Nicholas Akins, chief executive of Midwest utility giant American Electric Power.
On Tuesday, more than 160 chief executives from major companies signed a letter organized by the Business Roundtable pledging support for a “compromise” that would “result in market-credible spending reductions and revenue growth.”
On Wednesday, several hedge fund executives met with White House aide Valerie Jarrett to discuss how to resolve the budget dispute, according to a person familiar with the meeting.
Power-generation companies jumped in, too, and unlike many groups they offered specifics. The chief executives from half a dozen of the nation’s biggest utilities met Wednesday with Gene B. Sperling, head of the White House’s National Economic Council, and fanned out to see 11 key members of the Senate in an effort to make sure new tax rates on dividends do not exceed the rates on capital gains. Both are now taxed at a 15 percent rate.
A stalemate in talks about the fiscal cliff would mean that dividends start being treated as ordinary personal income taxable at the top marginal rate. That in turn would make it harder for utilities to raise capital for investment, they said, and discourage retirees and others from buying utility stocks for substantial and steady dividends.
But the executives said they would be satisfied if the rate for both dividends and capital gains were raised to 20 percent, the level that has the support of the Senate Finance Committee and that would maintain parity between the two.
Plan to end subsidies
Meanwhile, the American Wind Energy Association (AWEA), which is seeking an extension of the production tax credit for wind farms, on Wednesday laid out a plan that would phase out subsidies to the industry by 2018. The group said that the full 2.2-cents-a-kilowatt tax credit should be extended one more year, then be ratcheted down 10 percentage points a year until 2017, then hold steady at 60 percent of current levels during 2018, and then disappear.
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