Change US Tax Code, Business Will Invest: FedEx CEO
The U.S. economy is improving but would be even healthier if the tax code was changed to give companies more incentives to invest, the head of FedEx told CNBC Thursday.
"I'm looking for a GDPnumber of about 2.1 percent this year," a bit below the consensus view of 2.5 percent, said Frederick W. Smith.
"The U.S. economy is growing. Unfortunately, it’s not growing at a rate that’s high enough to absorb the growth in population, so we’re not making much of a dent in the unemployment numbers."
Smith, whose $41 billion shipping company handles 8.5 million shipments each business day, said the reason U.S. corporations are keeping $2 trillion on the sidelines is "the United States is not as good a place to invest as other places around the world, because of growth there, and we penalize profits made abroad from being brought back to the United States, where they can be invested and produce American jobs."
The FedEx CEO, a member of the Business Roundtable, an association of chief executives of leading corporations that pushes a pro-business agenda, said more incentives are needed.
His own company took advantage of a federal expensing incentive, now lapsed, to increase capital expenses by $4.2 billion.
"We bought Boeing airplanes and Ford trucks and Cummins engines and Cisco routers and Dell computers and [Hewlett-Packard] equipment and so forth. So I think you see the same phenomenon throughout the economy," he said. "People respond to investment incentives."
He said Congress and the leading U.S. presidential contenders of both parties seem to get it.
"I think there is a consensus that the tax code we have today, as far as business is concerned, needs to be fixed," Smith said. He predicted that at some point in the lame duck session or in the next Congress, whether a Democrat or Republican is in the White House, "you’ll see that issue addressed because everyone understands how punitive this is to job creation in the United States."