Johnson & Johnson CFO pushes back against Biden's proposed corporate tax hike

Biden's proposal raises the top corporate tax rate to 28% from 21%

Johnson & Johnson CFO Joseph Wolk* on Tuesday questioned the impact of President Biden’s proposed corporate tax hikes

The Biden administration has discussed raising the top corporate tax rate to 28% in order to help pay for its $2.3 trillion infrastructure package that would span eight years. Reports indicate Senate Democrats could seek a 25% rate that would raise $600 billion over 15 years. 

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"With respect to tax reform, we share a lot of rhetoric about a race to a bottom," Wolk said Tuesday on Johnson & Johnson’s first-quarter earnings call. "I don't know why folks are anxious to have a race to the top in terms of rates either."

He said Johnson & Johnson is on track to increase investments in the U.S. by 25%, or more than $30 billion, over the four-year period following President Trump’s Tax Cuts and Jobs Act, which lowered the top corporate rate to 21% from 35%, among the highest in the world. At the time the tax cut was announced, Johnson & Johnson said it would raise its U.S. investments by 15%. 

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As a result of those investments, Johnson & Johnson employs 3,000 more workers now than it did when the Tax Cuts and Jobs Act was announced. 

Wolk worries that raising the top corporate tax rate will make the U.S., which is in the middle of the pack in terms of competitiveness among OECD countries, even less competitive than it is now.  

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"If we want to raise rates even to 25% and you include tax from states, we become the highest-rated developed country in the world with respect to tax rates," he said. "So I think it's something that we need a little more fact-based dialog on and making sure that we remain competitive."

*This story was corrected to show the comments were made by Wolk and not CEO Alex Gorsky