CASE STUDY: Washington Inaction On Tax Extenders Harms Businesses
This fall – like every fall over the past several years – Congress will have to decide whether or not to extend more than 50 expiring federal tax provisions. Lawmakers generally leave it until December to pass this legislation, the so-called the “tax extenders” bill, a fact that MSCI has long-argued creates uncertainty for businesses. A new study from Grant Thornton confirms MSCI’s argument. The firm surveyed more than 900 chief financial officers (CF)s) and found more than half (51 percent) of the companies they represent that use one or more of the expiring tax provisions is acting as if Congress won’t extend them. That mindset inhibits businesses’ willingness to make greater investments in capital projects or their workforce. Only 35 percent of companies have assumed the tax extenders package will pass Congress and are making plans as such. The Grant Thornton report also found:
- 45 percent of CFOs said that the increasing cost of regulatory compliance presents one of the biggest challenges to growth;
- North American companies lost $28.9 billion due to currency swings in the first half of 2015 – more than six times their losses from the same period in 2014; and
- 55 percent of CFOs said uncertainty in the U.S. economy is a major concern that could impact their businesses’ growth over the next 12 months.