Cut Taxes to Spur Growth: CEOs
A majority of CEOs at publicly traded companies and owners of U.S. small businesses believes cutting business tax rates is the most effective way to create permanent jobs, according to a new survey.
Thatâ€™s a core finding of the 2012 NYSE Euronext CEO Report, a survey of 340 CEOs from companies listed on the NYSE Euronext (NYSE:NYX) and 285 U.S. small-business owners.
The survey was conducted in July by market research firm ORC International and presented in cooperation with the FOX Business Network. The results were released Monday.
With a presidential election rapidly approaching, in which job creation is undoubtedly the single most important issue, the survey found that among business leaders from nearly 30 countries there is a â€œclear sense that targeted changesâ€� to regulatory, fiscal and tax policy in the U.S. would be â€œa strong catalyst for job creation.â€�
The CEOs and small-business owners also called for reducing government spending and lowering the burden on businesses of compliance-related costs.
One survey participant said: â€œStimulate internal job creation by providing tax benefits for U.S. job creation and tax penalties for outsourcing. Incentivize banks to lend to small businesses at special rates and aggressively. Reduce government red tape. Keep Bush-era tax plan and consider flat-tax model for real.â€�
Entrepreneurs just starting out are less optimistic than their peers in big business, according to the survey. This is â€œa major issue,â€� the survey warns, because so much U.S. hiring is done by small business startups.
The survey said a â€œmajor obstacle holding back growthâ€� of U.S. small businesses is lack of access to capital. The continued credit crunch is helping to fuel a â€œsplit level recovery,â€� the survey found, with large companies expanding while smaller ones continue to struggle.
â€œEntrepreneurs are struggling and need help,â€� according to the findings. â€œThey plan on minimal hiring and since these firms are the identified source of new job creation, this is a major issue.â€� Two-thirds of small business owners expect they will not be adding jobs or will be cutting jobs in 2013.
In addition, more than 80% of U.S. small-business owners say that their capital financing needs are not being met and most do not see this changing in 2013.
In all, seventy-one percent of publicly traded CEOs and 59% of U.S. small-business entrepreneurs think the current environment for entrepreneurs is â€œunfavorable.â€�
â€œWe must make it more attractive for businesses to conduct operations in the USA. This means simplifying the tax code, perhaps lowering tax rates, and making it far easier to get qualified international workers to come to the U.S.,â€� one participant said in the survey.
Meanwhile, the survey reported that large majorities of both listed CEOs and U.S. small- business entrepreneurs think results of the U.S. election will have an impact on the U.S. economy, jobs and the global economy.
Asked if they could offer advice to the next president and the next Congress, the survey participants said both should focus on reducing regulation and the size of government and reducing or keeping corporate taxes low.
The CEOs and owners agree that while the recovery from the 2008 financial crisis is slow there is â€œsome forward momentum.â€� The eurozone debt crisis remains a sizable threat to economic recovery, however, both in Europe and the U.S.
While most public-company CEOs and U.S. small-business owners currently rate the global, U.S. and eurozone economies as fair or poor, according to the survey, large majorities of business leaders think the global and U.S. economies will grow in 2013.
The same cannot be said for Europe.
More than two-thirds (68%) of the CEOs of publicly traded companies surveyed said the eurozone is important to the economy and their businesses. Owners of small businesses said they are less impacted by the more than two-year-old credit crisis.
Regardless of Europe, many business leaders, especially those of large companies, remain optimistic that growth is right around the corner.
Public-company CEOs continue to plan for growth, according to the survey. By far the top area where CEOs expect to see the largest budget increase in 2013 is capital expenditures, indicating they are planning for expansion. Almost all CEOs (92%) expect their companies will experience growth over the next three years, including 39% who anticipate significant growth, the survey found.