The vast majority of C-suite executives in the U.S. believe that the recent tax reform will make their company more competitive by providing tax savings that can be used for new strategic investments, according to the results of a survey fielded by professional services provider PwC to investigate how businesses are changing their strategies to take advantage of the Tax Cuts and Jobs Act of 2017 (TCJA).
In the survey of 403 CEOs, CFOs, and COOs, conducted April 23-May 10, 89% of respondents reported that their company has experienced savings as a result of the tax reform, and that these savings will have implications for how they run their business. Moreover, 79% of the executives surveyed said they believe tax reform savings will give their company an opportunity to make strategic business investments not possible in the past, and 81% reported that their company has developed a long-term strategy for investing tax reform savings.
When asked what kinds of investments their company has made in response to the TCJA, 63% of respondents said they have invested in their workforce by, for example, increasing hiring (24%), raising wages (24%), making contributions to retirement plans (22%), expanding benefits (21%), reskilling (21%), and providing a one-time employee bonus (18%).
In addition, 62% of respondents indicated that their company has invested in strategy and capabilities, including digital capabilities (23%), R&D (22%), long-term strategy (22%), cybersecurity (20%), M&A (19%), and new service/product offerings (18%). Another 30% of respondents reported that their company has invested in corporate finance, including paying off debt (20%) and executing share buybacks (15%).
Moreover, when asked to identify the areas their company is likely to invest in over the next year as a result of changes in the tax code, 87% of the executives surveyed said they expect to invest in their workforce by increasing hiring (65%), raising wages (62%), expanding benefits (59%), reskilling (54%), making contributions to retirement plans (50%), and providing a one-time employee bonus (49%). Meanwhile, 80% of respondents said their company intends to invest in growing stronger capabilities, including R&D (61%), long-term strategy (58%), digital capabilities (54%), cybersecurity (54%), M&A (51%), and new service/product offerings (48%); and 65% said their company plans to reach customers by lowering their prices (55%) and expanding their geographic footprint (53%).
The results further indicated that 78% of respondents believe that the TCJA makes the U.S. a more attractive place for their company’s business, with 30% saying their company is likely to make geographic changes as a direct result of the tax reform; and another 34% indicating that they are considering implementing similar changes, including moving or adding administrative offices, shared services, R&D centers, service points, manufacturing plants, and distribution centers.
From Benefit Trends Newsletter, Volume 61, Issue 8
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