Trump Pulls Out Tax Cut Card... BlackRock CEO Says "Taxes Should Be Raised"

Corporate Tax Expected to Rise from Current 21% to 29%

▲Larry Fink, CEO of BlackRock [Image source=AP News]

[Asia Economy Reporter Kwon Jaehee] Larry Fink, CEO of BlackRock, the world's largest asset management company, mentioned that taxes need to be raised. Given the economic crisis caused by the spread of the novel coronavirus disease (COVID-19) and the expected increase in fiscal spending, it is necessary to secure tax revenue despite the pain. Attention is focused on whether a 'tax' controversy will erupt in the U.S. political and business circles, as President Donald Trump advocates tax cuts for economic stimulus.

On the 6th (local time), Bloomberg News, citing an anonymous source, reported that CEO Fink mentioned during a call with clients of an asset management advisory firm that "as part of the Trump administration's tax cut policy in 2017, the corporate tax rate was lowered to 21%, but it could rise to 29% next year." He also predicted that individual income tax rates would increase. During the call, CEO Fink reportedly warned, "Although the U.S. economy is sinking deeper into recession, tax revenue must be increased to urgently support sectors where recovery is difficult."

It is unusual for a corporate CEO to mention the necessity of a tax rate increase. When the corporate tax rate is low, profits relatively increase, allowing companies to increase dividends to shareholders. However, since securing funds for economic stimulus is not easy, it appears that he concluded that securing tax revenue through tax rate increases is inevitable. Bloomberg News wrote in this regard, "The government may have to take a larger share from corporate and individual incomes."

Due to increased spending caused by COVID-19, the fiscal situation of the U.S. federal government is deteriorating. The Congressional Budget Office projected that the federal government's fiscal deficit for the 2020 fiscal year (October 2019 to September 2020) will reach $3.7 trillion, which is 17.9% of the U.S. Gross Domestic Product (GDP).

CEO Fink's remarks stand in direct opposition to President Trump's stance advocating tax cuts. On the 5th, President Trump tweeted, "The issue of payroll tax and capital gains tax cuts must be on the table," suggesting the use of tax cuts to respond to the economic crisis caused by COVID-19.

However, both the Democratic Party and the Republican Party, President Trump's own party, are lukewarm about the tax cut suggestion. The Democrats stated that support for small and medium-sized enterprises, small business owners, and state governments should take priority over tax cuts, while the Republicans are concerned about the rapidly increasing fiscal deficit. Republican Senator John Kennedy said, "We need to see what works and how much money will be needed after the economy recovers," and Republican Senator Richard Shelby, chairman of the Senate Appropriations Committee, remarked, "If we are spending a lot of money, we must be careful not to ruin the country."

This content was produced with the assistance of AI translation services.