New Survey: Taxmageddon Paralyzes Business Plans
May 30th, 2012

When it comes to taxes and economic growth, the most visible battle cry among businesses is to slash tax rates. Multiple business advocacy organizations and a string of Republican lawmakers say dropping the top federal U.S. corporate rate from 35 percent to 25 percent would boost U.S. companies to hire, invest, and compete globally.

For corporate finance chiefs, however, lowering rates is not top of the agenda. What worries them most is the whole slew of business-centric tax changes set to take effect in 2013 unless Congress steps in– what economists have dubbed “Taxmageddon.”

A survey released Tuesday by tax firm Alvarez & Marsal Taxand shows that of 302 chief financial officers surveyed by, a majority said eliminating uncertainty in the tax code topped lowering tax rates on their wish lists.. About three-quarters of respondents represent firms with less than $1 billion in revenue, while the remaining quarter represent billion-dollar enterprises.

Nearly three-quarters of businesses perceive that lawmakers’ current tax reform proposals are too premature to determine how they will affect their businesses, the survey found.

“Confidence in knowing precisely what the tax code will require has become more important than how much it will cost them,” said Robert N. Lowe, chief executive officer of A&M Taxand. “As long as proposed changes remain up in the air, companies will be forced to continue to burn fuel operating in holding patterns rather than charting productive courses forward.”

Some of the most consequential business-related tax code changes set to take effect next year include the expiration of the research and experimentation credit, a cut deducting certain business purchases from $500,000 to $125,000, the end of accelerated depreciation on certain business property, a rise in the capital gains rate from 15 percent to 20 percent, and taxing dividends as ordinary income at a top rate of 39.6 percent.