FEI Responds to President Obama's Fiscal Year 2013 Budget Plan Organization of Senior-Level Financial Professionals Applauds Deficit Reduction Initiative, Opposes Harmful Tax Changes for American Job Creators
WASHINGTON and MORRISTOWN, N.J., Feb. 14, 2012 /PRNewswire/ -- Financial Executives International (FEI), a professional association for senior-level financial executives from both major public and private companies, today issued a statement to address reservations with certain key points of President Barack Obama's FY2013 Budget Proposal.
"I am pleased to see that the President has advanced a budget that proposes to reduce the deficit by $4 trillion, helping to stabilize the debt and contribute to long-term economic growth. Committing to extend expiring tax provisions, such as 100% bonus depreciation, and to increase and make permanent the research and experimentation tax credit, while lowering the corporate tax rate, are critical components of a sustainable economic growth strategy. This gives job-creators the tools to create new products, expand business operations, and become more competitive on an international scale," said Marie Hollein, President and Chief Executive Officer, Financial Executives International. "Unfortunately, aspects of the President's proposals to increase revenue would harm American job creators as well."
FEI's specific concerns include the following:
- Corporate Tax Policy: FEI's Committee on Taxation supports corporate tax reform that would lower the corporate income tax rate and put in place a territorial tax system to improve the competitiveness of American companies at home and abroad. FEI observes with concern that the budget proposes roughly $450 billion in tax increases on American businesses over the next 10 years.
- Individual Tax Rates and Privately Held Companies: The President's budget calls for the 2001 and 2003 tax cuts to expire for individuals with income above $250,000, potentially hurting private companies structured as flow-through entities that are taxed at individual rates. The plan also calls for a return to the 2009 estate tax exemption and rates, which could create a tremendous burden for many private companies who will either have to divert capital away from making investments in plants and jobs in order to account for the possibility of a death of an owner, or sell or liquidate the company upon the death of an owner. FEI's Committee on Private Company Policy continues to educate lawmakers about the business impact these types of proposals could have on privately-held and family-owned businesses that employ millions of Americans.
- Defense Cuts: The President's budget requests $525.4 billion in discretionary funding for the base Department of Defense budget, a decrease of 1% from the 2012 enacted level. The President announced that reductions in the defense budget are expected to save $487 billion over the next 10 years. The FY2013 procurement budget is slated to drop 4.9% below FY2012 actual expenditures. In addition, the budget reduces Overseas Contingency Operations (OCO) by 24% to $96.7 billion in FY2013, and caps OCO at $450 billion through 2021, yielding roughly $1 trillion in savings from the DoD, State Department and USAID overseas budgets. FEI's Committee on Government Business continues to seek ways to improve the procurement process in order to optimize cost efficiencies and maximize taxpayer value while enhancing the nation's security.
- Higher Costs for Companies with Pensions: The President's FY13 budget plan once again calls for an increase in the Pension Benefit Guarantee Corporation (PBGC) premiums charged to companies with defined benefit pension plans. The proposal calls for higher rates to be charged to companies whose pension funds are deemed more at risk of becoming insolvent, and is estimated to bring in $16 billion in revenue over 10 years. FEI's Committee on Benefits Finance has opposed significant increases to PBGC premiums because they magnify funding pressure on companies that offer these benefits, particularly at a time when low interest rates are creating artificially higher plan liabilities.
Added Hollein: "While FEI awaits further details of the President's corporate tax reform proposal, we applaud the President's attention to this matter and hope that the administration will reconsider the points that impede the growth of American businesses."
Financial Executives International is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers and controllers at companies from every major industry. FEI enhances member professional development through peer networking, career management services, conferences, teleconferences and publications. Members participate in the activities of 85 chapters, 74 in the U.S. and 11 in Canada. FEI is headquartered in Morristown, NJ, with additional offices in Washington, D.C. and Toronto. Visit www.financialexecutives.org for more information.
SOURCE Financial Executives International