FedEx CEO Fred Smith recently vented his frustration with the U.S. tax system in an interview on CNBC. When it comes to spurring much needed growth in the private sector, Smith thinks the answer is very straightforward.
“Change the U.S. corporate tax system,” he said. “It’s very dysfunctional, and it retards investment. And investment, in turn, is what creates GDP growth and jobs.”
According to Smith, innovation and investment drive growth and wealth. Yet, today’s tax system is “prejudiced towards financialization, leverage and lack of investment.”
So he suggested his own prescription: lower the corporate tax rate, take out all of the special deals and deductions and provide an incentive for investment.
“I believe that the main reason the United States clawed out of the recession of ’08 and ’09 was the President’s support of expensing, the bonus depreciation . . . You get to the same place, you can either lower the tax rate to a worldwide competitive level of say, 25 percent, or you can provide an incentive for capital investment and investment tax credit, permanent 100 percent expensing, and, in fact, the administration supported, and in a bill that just passed, they have 50 percent bonus depreciation but it’s only for one year. It’s very straightforward, and I think there is agreement. It’s the politics that keep it from getting done.”