GM supports tax reform under Trump
General Motors Co. is supportive of corporate tax reform and is engaged in working with President Donald Trump’s administration to craft such a proposal, the company’s chief financial officer told reporters Tuesday in Detroit.
“We support tax reform and we support tax reform that ultimately would be executed that would make the U.S. manufacturing base stronger,” GM Chief Financial Officer Chuck Stevens said.
He told analysts and investors on a conference call that GM is sharing job creation ideas and industry facts with lawmakers “to help them create proposals that will be positive for the U.S. economy and keep vehicles affordable.”
Stevens said a border tax — which Trump has called for for companies that build products and vehicles in Mexico and ship them back into the U.S. — is “pretty complicated.”
“What we want to do is work constructively with the administration to come up with a tax reform proposal that is beneficial to the U.S. economy, beneficial to U.S. manufacturing and creates jobs,” Stevens said. “At this point in time there’s a lot of moving pieces. But our objective is to engage constructively in that endeavor.”
Trump also has said he wants to renegotiate the North American Free Trade Agreement. Trump has suggested a border tax of 20 percent on imported goods coming to the U.S. from Mexico could be used to pay for a new wall he wants to build along the border of the U.S. and Mexico.
Stevens said on a conference call that GM believes it would be better positioned than average as it relates to the percentage of imported content vs. competitors.
He said the U.S. auto industry on average gets more than 50 percent of its content from non-U.S. sources. GM’s percentage is lower, Stevens said.
GM also is weighing favorable benefits of some elements of tax reform such as benefiting from exports and it estimates cash taxes will remain low for a few years. But there are unknown impacts such as foreign exchange, gross domestic product growth and “how cost and benefits are allocated through the supply chain,” Stevens said.
GM Chairman and CEO Mary Barra is part of a group of business leaders that is advising Trump on economic policy issues. The group officially met for the first time Friday at the White House.
Barra, on the conference call, said she has shared information with Trump and his administration in recent weeks and meetings about the long-lead time of investments in the auto industry and the complicated supply chain. She said the understanding has been “well received.”
Michigan could greatly benefit from potential tax reform under the Trump administration, according to Business Leaders for Michigan Chairman J. Patrick Doyle. He said if the federal corporate income tax rate could be cut from 35 percent to 20 percent, it could cause an influx of companies to repatriate — giving Michigan a chance to compete for additional state tax revenue.
“A much better, healthier tax environment, I think, is going to help drive some on-shoring of work and we’ve got to put ourselves in a position as a state to hopefully capture hopefully more than our fair share,” Doyle, president and CEO of Domino’s Pizza, told The Detroit News on Tuesday.
Trump during his campaign floated as low as a 15 percent rate, however Doyle believes a 20 percent rate that’s revenue neutral, or doesn’t increases or decreases tax revenues when compared to existing law, would get the job done.
Business Leaders for Michigan President & Chief Executive Officer Doug Rothwell said with the right reform at the state level, Michigan also could better compete for regional company headquarters locations with the likes of Chicago and others.
“We think now’s the time to strike on that because we think there’s going to be a couple years here where we could really profit,” Rothwell said, adding it’s a combination of things such as Detroit’s revitalization and state incentives, among other proposals that could make Michigan more appealing to businesses.