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The Bottom Line

Middle class, wealthy and small business will all trail corporations in tax reform benefit: CFOs

Key Points
  • Half of CNBC North American CFO Council respondents believe large corporations will benefit most if the GOP tax reform plan becomes law.
  • Only 8 percent of CFOs say tax reform will lead to higher employee wages next year, and even less expect to add new jobs as a result.
  • The CFO Council represents some of the largest public and private companies in the world, collectively representing more than $4 trillion in market capitalization.
(L-R) Senate Majority Leader Mitch McConnell, Sen. Orrin Hatch, Treasury Secretary Steve Mnuchin and Director of the National Economic Council Gary Cohn introduce the Republican tax reform plan at the U.S. Capitol in Washington, U.S., November 9, 2017.
Aaron P. Bernstein | Reuters

CFOs at some of the biggest corporations in North America are straight shooters when it comes to the GOP tax reform plan: It will benefit them the most if it becomes law, they say. That's according to a new CNBC Global CFO Council survey.

Exactly half of CFOs (50 percent) told CNBC that large firms will benefit the most, and that represented a wide margin over any other group. Second among respondent choices was the middle class, which 12.5 percent of CFOs said would benefit the most from tax reform. Only 8 percent said wealthy individuals or small business would see the greatest benefit.

Nearly 75 percent of North American CFOs surveyed say their company supports at least one version of the tax reform plan.

The CNBC Global CFO Council represents some of the largest public and private companies in the world, collectively managing more than $4 trillion in market capitalization across a wide variety of sectors.

The survey was conducted from Dec. 6 to Dec. 13, 2017. Among the 45 North American based members of CNBC's Global CFO Council, 24 responded to the survey.

The latest version of the tax reform bill may push up the corporate rate to 21 percent (from a proposed 20 percent), according to a CNBC report on Tuesday afternoon. But that would still be lower than the 22 percent some had been arguing was the best way to deal with deficit concerns, and it would go into effect in 2018 rather than be put off for another year.

The tax break for pass-through businesses, used by a majority of firms that are not large corporations — which allows them to shield a percentage of business income from taxation — had been increased from 17 percent to 23 percent in the Senate version. In the latest compromise it would be taken back down to 20 percent, according to CNBC sources, though the negotiations are ongoing.

Workers and wages

While nearly half of CFOs who responded remain unsure about how the passage of tax reform would play out for their companies in 2018, some are projecting immediate benefits.

More than 20 percent said tax reform will "most likely" lead to an increase in stock buybacks, followed by increased R&D spending and major M&A activity. A little more than 8 percent said tax reform would increase employee wages next year, while just over 4 percent said it is "most likely" to increase headcount.

One council member noted that while large corporations would see the most benefit in the near term, eventually it would benefit workers by leading to "employee wage growth long term."

"Likely" is the sum of those who responded "most likely" or "likely." "Not likely" is the sum of those who responded "not likely" or "least likely."