Sen. Bob Casey (D., Pa.) is right about the tax bill currently working its way through Congress when he says, "Congressional Republicans have taken great pains to spin their tax scheme as great for the middle class, but a few marginal changes don't change the fact that their plan is fundamentally a massive giveaway to the wealthy at the expense of the middle class." And every CEO knows he's right.
How do I know what CEOs are thinking? I'm one of them.
I've grown a Philadelphia-based small business into a business with cafes and industrial facilities in six states and the District of Columbia. I've placed canned draft lattes on market shelves in every corner of the country. And I employ hundreds of people in almost every income tax bracket. Along the way, I've learned a thing or two about how to grow a profitable business that values the people at its core and the communities where we do business.
And I can tell you what no other CEO wants to tell you: Casey is right when he says that a half-trillion dollars of corporate tax giveaways proposed by the GOP aren't going to do a thing for the middle class, or create a single job.
Because what every CEO knows but won't tell you is this: A tax break for their company simply means a fatter bottom line.
Not jobs. Not investment. Just more money in the pockets of the folks like me.
That's bad policy, and it's time to set the record straight.
Congress is working on a bill with the goal of "tax reform" and "stimulating the economy," with the half-trillion in corporate tax giveaways, most of which is shouldered on the middle class, whose taxes will go up. The wealthy and corporations that will benefit most from this "reform" neither need nor require it.
This "stimulus" clearly falls within the sort of cuts one might expect when the economy needs to be goosed — typically when investment cash supply is low, when interest rates are high, or the stock market is slumping or even tumbling.
But what every CEO knows but will not tell you is that the reverse conditions are actually true — this is not an economy to goose. If anything, the present business landscape is red hot and over-stimulated. Cash and capital are flowing heavily with unprecedented amounts of money looking for a home for investment, interest rates are extraordinarily low, and the stock market is at top-row, nosebleed heights.
A CEO has a powerful fiduciary duty to return all profits to shareholders — not to the employees, or the suppliers, or the community and certainly not to the unemployed or left behind. Let me say that again: Profit goes to shareholders (and the CEO) and not to the employees.
A tax code designed to increase corporate profits will benefit a single group — investors. The same investors already bathing in an unprecedented investment cash inventory and who are proportionally the most wealthy among us.
The result for the employees, the small-business supplier, or any other member of the working or middle class is that they will see the same flat-line growth that they have for decades. By increasing the wealth at the top and ignoring the rest of America, Congress will further increase the cavernous gap between the wealthy and the working class.
Congress is missing the majority of Americans who need a stimulus. It's clear where the highest "Return on Investment" is, and it's just screaming to be invested directly into the working and middle classes. Invest in people, where there is no fiduciary duty to push the stimulus to the investment class. The extra income will go toward everyday purchases, which help businesses; it goes to education, which gives us a more skilled workforce; and it gets invested in family, the true backbone of our country.
And finally, what every CEO should tell you but won't is that if your business is teetering on the edge of solvency and the only thing that is holding you together is the rewriting of tax code, you're probably going to go out of business anyway. Sure, we all believe in the American Dream, but you've got to have a quality product, quality employees, and a business system that works to succeed. Don't wait on Congress to destroy the middle class in tax cuts to give another fat-cat executive a bigger bottom line. I'm a CEO who knows firsthand that this won't work.
Casey is right to push back against giving corporations a tax break. We don't need it. Invest where the good investments are, our people.