by Laura Hennessey Martens
Chief financial officers from leading companies in the Washington, D.C., region had a robust discussion about the first 100 days of the Trump administration and its impact on business, the economy and society during a recent Strategic CFO Roundtable. The roundtable is a select peer-to-peer forum hosted by the University of Virginia Darden School of Business Institute for Business in Society.
Convened on 11 May at the offices of Sands Capital Management in Rosslyn, Virginia, the roundtable members began by sharing their outlooks on the global and U.S. economies.
“My view is that everything seems much better than perhaps people were expecting once the election was over,” said one member. “The stock market is strong. The job market is strong. Inflation rates are low. Things are pretty stable.”
As the CFOs turned to a discussion of the main roundtable topic — Trends and Ramifications from the First 100 Days of the Trump Administration — they offered opinions and insights on subjects such as corporate and individual tax reform, small business reform, healthcare and the federal budget.
In agreement that President Donald Trump’s proposal to lower the corporate tax rate from 35 percent to 15 percent was too drastic and therefore unlikely to be passed by the U.S. House of Representatives and Senate, the members expressed their desire for some form of corporate tax change, recognizing that a lower rate would create stock market value.
The executives were less optimistic that President Trump’s individual tax reform proposals would achieve the administration’s stated goals. “I don’t think you’re going to incent anyone who’s making $50,000 a year with these kinds of tax changes,” stated one CFO.
As they proposed various tax reforms that might work better, the majority of the members concurred that tax policy should not be used to force social policy. They also expressed universal support for eliminating the estate tax, often referred to as the “death tax.”
“You’re charitable because you want to be charitable,” said one executive. “For example, why are we incentivizing people to buy homes versus rent?”
“I’ve always felt that making death a taxable event is just wrong,” said another. “It’s double taxation, and in some cases, triple taxation.”
The roundtable members appeared unconvinced by the administration’s assertion that millions of jobs would be created through President Trump’s proposed tax reforms, with the majority of members not viewing tax reform as the proper method to achieve that goal. Instead, they agreed with one CFO who suggested entrepreneurship and small business creation to be the vehicles more likely to generate jobs.
In addition, many members did not believe Trump’s tax proposals could be adequately explored without considering their interconnectivity with other policy issues such as health care and federal spending.
“We can’t just continue to cut taxes and not find other ways to balance the budget or reduce spending. And that can’t come, in my opinion, at the expense of people in our society who need help,” stated one executive.
One roundtable member said political gridlock and lack of innovation could deter progress on health care policy. “Society has to come to grips with whether we want government to do it, or do we want the private sector to do it with government oversight?” he said. “We don’t come up with long-term viable institutions that will accomplish these things, and that’s the biggest problem.”
Additional insights from this session are available in the report, “Views from the C-Suite.” The next roundtable will convene in September 2017.
Roundtable members are selected CFOs from publicly traded and private equity-held companies headquartered in the Washington, D.C., metropolitan area.
Darden Professor Kenneth Eades and The ILEX Group Managing Principal and General Counsel Jane-Scott Cantus, an Institute for Business in Society Fellow, founded the Strategic CFO Roundtable in 2008. In 2013, the Strategic CFO Roundtable was adopted as a key initiative of the Darden School’s Institute for Business in Society.
This article also appeared in The Darden Report on 1 June 2017.