Former Walmart CEO: Biden tax increases would slow pace of economic recovery
Simon also warns a change in the regulatory environment will be a 'challenge' for businesses
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Former Walmart CEO Bill Simon warned on Wednesday that Joe Biden’s tax plan “would slow the pace” of the economic recovery.
“I think if they were able to get the tax increases through, it would slow the pace of the recovery, particularly during the period where they’re deciding and implementing because that will be uncertainty,” Simon told “Mornings with Maria” on Wednesday, as slow returns in key swing states were delaying the results of the 2020 election and making it impossible to call the race for either President Trump or Biden.
If elected president, Biden plans to repeal changes made to individual income tax rates for the wealthy (individuals with incomes over $400,000) under the 2017 Tax Cuts and Jobs Act, which means the top rate would revert back to 39.6%, from 37%.
Biden would raise the corporate tax rate to 28%. The Tax Cuts and Jobs Act reduced the corporate tax rate to 21%, from 35%.
Another big change Biden wants to make is to tax capital gains at the same rate as ordinary income for households earning more than $1 million.
Former Walmart CEO Bill Simon provides insight into the 2020 presidential election, Joe Biden’s tax plan and the state of retail.
Currently, short-term capital gains are taxed at the same rates as income, but long-term gains are taxed at lower rates. The top long-term rate is 23.8%.
Simon noted that “if things stay the way they are in the Senate,” tax increases won't be the “real issue” as a Republican majority in the Senate would likely block that from happening.
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He went on to say that he thinks the “real issue” will likely be the “change in the regulatory environment because that’s largely done by the administration through the cabinet appointees.”
He went on to explain that he thinks that “the challenge” for businesses is that they will be “figuring out the new regulatory environment, particularly in some of the environmental areas and banking, areas where cabinet officials may change the regulations or the process that the regulations are posted through.”
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Host Maria Bartiromo also pointed to recent economic data and asked Simon to provide his “assessment of where we are in the economy.”
“I have been really surprised that the consumer, throughout all this, has been remarkably resilient,” Simon responded. “Consumer spending has really held up.”
He went on to say that if the outcome of the election “results in another stimulus, I think we’ll head into the end of the year at a very strong place.”
U.S. consumer confidence dipped slightly in October as a new wave of coronavirus cases began across the country after rising in September to the highest level in nine years.
Consumer spending, which accounts for 70% of economic activity in the U.S., dropped to 85.7 in April as many parts of the country went into lockdown to slow the spread of the novel coronavirus. In the months before that, it had consistently been well above 100, with the index hitting 132.6 in February.
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On Wednesday, Bartiromo referenced the fact that the U.S. economy grew at a record-shattering pace in the third quarter as businesses reopened from the coronavirus shutdown.
GDP, the broadest measure of goods and services produced across the economy, surged by 33.1% on an annualized basis in the three-month period from July through September, the Commerce Department said in its first reading of the data Thursday. The previous post-World War II record was a 16.7% increase in 1950.
Bartiromo also noted that the ADP National Employment Report released Wednesday “told a different story” as it indicated private employers hired at a slower-than-expected pace in October.
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The report showed that companies created 365,000 new jobs last month, sharply missing the 650,000-job increase that economists surveyed by Refinitiv had expected.
Bartiromo noted that Simon, who is now a senior advisor to the investment firm KKR and serves as the president of WSS Venture Holdings, has his “hand in so many different investments” and asked him how the economy feels to him “in terms of retail” and “broad business.”
“I think, from a business standpoint, it’s going to be challenging for the next few days, while we wade through the result of the presidential election, but I have a lot of confidence in the business community that they’ll be able to figure out which way this is going to go and figure out whatever the new set of rules are and figure out a way to move forward,” Simon said.
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“With respect to retail, you’ve seen some real successes and you’ve seen some real struggles and that’s not any different than it was prior to the pandemic, but I think the pandemic has accelerated this.”
Fox News’ Brittany de Lea, Megan Henney and The Associated Press contributed to this report.