Name: Emerson Electric CEO: It's Time for Tax Reform
Uploaded: 2017-09-08
Duration: 4 min 53 s
Description: David Farr is optimistic Congress will approve a tax reform plan by the end of the year.

David, you've been saying that American businesses are having a hard time winning around the world. How are they losing? The biggest issue we see in America today is around tax policy, around regulation and a focus on keeping American companies competitive here in American. So you've been calling for a big tax cut for American businesses bringing the corporate tax rate down from something like 35 %. To 15 % tell us why that will make the US more competitive. It would cause money to come into United States. Not only American companies but you'd see foreign companies say, hey this is an important market place, from a [ UNKNOWN ] structure, from an economic structure and a growth standpoint. So you'd see other countries and businesses coming into United States. So let's just say that the corporate tax rate does get down To 15 % what would that mean for a company like Emerson Electric? Here you're a $ 15 billion manufacturing company, you do businesses and more that a 150 countries around the world. What would be different for you? What would you do differently? It'll allow me to say I have more money to invest. Back into the company. Both from the standpoint of investments in technology investment in my people, investment in innovation, new products, and growth programs give me more chance to invest. And less money would go into the government coffers, but more into our company and then look for us to grow faster. The critics would say That, if you give more cash, to American companies, they're either going to buy back their stock, pay more in dividends, do an acquisition, not necessarily hire more, or invest more, what do you say to that? Giving dividends is a good thing, cuz it puts money back into an individuals hands, but the same time, I think the pressure will be put on the CEOs. Okay, we're giving you this benefit now show us that you can do something with this benefit. But I fundamentally believe the business leaders I've talked to across the NAM they want this opportunity. They see that we need to invest, we need to grow faster and they want this chance. And I fundamentally believe that we will step up to it. If we don't Things would change in Washington. What could lower taxes mean for the US economy in terms of it's growth rate? Right now it's running, it's growing at around two and half maybe 3 %. How much better could it get? It would have increased the tax revenues obviously for the government, their needs and governments need but at the same time it really would drive a little bit faster on a line growth rate. But equally important not only to American companies I'll say it again, you'd see foreign companies looking and say, look America is more competitive for overall cost structure of tax and regulations and all the different structures they look at and make those investments and this is the largest economy. And if you start growing this economy around 3 % for four or five years, you'd see a lot more foreign companies invest in this country which would drive additional jobs and clearly investments for all of us here in America. You know David when people talk about taxes. Tax cuts, and tax reform. They're using those words interchangeably as if they meet the same thing. But how much could a simple tax cut change things up in the U. S. versus a major structural change in the tax code? One's short term, one's longer term. From my perspective, we are due for a longer term from the tax reform, which is a lot harder work. A lot harder lifting, because people have to think about what's important to the US economy, what's not important, and where do we want to incentivize people from that perspective. Well, the last time we had a major overhaul in the tax code was in 1986. So more than 30 years ago, and it took so many years to pull it off. So is that doable now? Yes, it is doable now. Because people from the government standpoint, and from the business leader standpoint. And just the overall economy, realize we need structural change in the tax reform to realize the potential of the economic growth of this country. President Trump is pushing for a tax plan By the end of this year, how realistic is that? I think it's realistic at before the end of this calendar year, yes. And why is that? Because I think the focus is so intense right now on trying to get the economy grow faster, the businesses are focused on that, we see the right temperature in the world, and we see that we need to do this. The easy answer would be just like you said, do a quick tax cut. That's one thing. But that's just a temporary, where I think we have a window opportunity here between the people and Congress and the White House to do some fundamental structural change. Can we afford to do this now? I mean, as you know, Congress is under pressure on a lot of fronts. Increase the debt ceiling, agree on some kind of budget plan Approve emergency funds for Hurricane Harvey. The answer is yes. We cannot afford not to do it. There's a lot of issues that need to get done. Yes we have to get the debt ceiling. Yes we have to do the funding. Yes we have to do a comprehensive immigration package. Yes we have to do this. But tax reform, from my perspective, is the most important thing right now that needs to be done for the long term economic viability of the US economy. [ BLANK_AUDIO ]

Emerson Electric CEO: It's Time for Tax Reform

Politics

David Farr is optimistic Congress will approve a tax reform plan by the end of the year.