certainty on U.S. taxation would have the most significant effect on the nation’s economic recovery, according to many business executives polled by KPMG’s Tax Governance Institute (TGI), and most said passage of the American Taxpayer Relief Act of 2012 isn’t likely to pave the way to comprehensive business tax reform in 2013.
Also, nearly half of survey respondents (44 percent) felt the upcoming showdown between President Obama and Congress over the debt ceiling and “sequestration” (automatic spending cuts) will be the most significant issue for U.S. economic recovery over the next few months.
In the survey of some 3300 business leaders, a full one-third (33 percent) felt more tax certainty for both business and individuals would have the greatest impact on the economy. Forty-three percent said they did not feel the new tax legislation, also known as the “Fiscal Cliff” tax agreement, will lead Congress and the President to move forward with business tax reform in 2013, while 31 percent said they thought it would and 26 percent were not sure.
KPMG’s Hank Gutman, principal and director of the TGI and former chief of staff of the U.S. Congressional Joint Committee on Taxation, said: “The business community is telling us that a stronger economic recovery is clearly linked to having a better picture of how companies and individuals will be taxed. They also acknowledge that prospects for a quick resolution of tax reform -- and the business tax issue in particular -- is far from clear over the short term.”
Most respondents (42 percent) said they did not expect comprehensive business tax reform to be enacted until beyond 2015, while 20 percent said they expected to see it in 2014.
Other factors cited by respondents as significantly affecting a U.S. economic recovery were the European bank crisis (24 percent), the Chinese economy (13 percent) and Mideast turmoil (9 percent).
The survey reflects the responses of more than 3300 members of the Tax Governance Institute -- including board and audit committee members, chief financial officers and tax directors -- who participated in the TGI’s Jan. 8 video webcast, “Update on the American Taxpayer Relief Act and the ‘Fiscal Cliff.’” A replay of the video webcast is available here.
Part of the KPMG Institute Network (www.kpmginstitutes.com), the Tax Governance Institute (www.taxgovernanceinstitute.com) provides opportunities for board members, corporate management, stakeholders, government representatives and others to share knowledge regarding the identification, oversight, management, and appropriate disclosure of tax risk.
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