by Dave Moore, Staff Writer
Congress – currently attempting to retool the U.S. Tax Code – could can learn a lot from Texas’ system of taxation, incoming Dallas Regional Chamber Chairman and AT&T CFO John Stephens told the crowd gathered for the DRC’s Year Ahead Summit on Thursday, Nov. 9.
“We’ve got a great economy here,” Stephens said to the crowd of 250. “It’s better than the rest of the country. It’s one of the things that’s so attractive to other businesses that want to move here… the rest of the country has had a modest or slow growth rate of about 2 to 3 percent GDP.”
The national economy hasn’t seen much wage growth, and that’s important to AT&T, he said.
Stephens said Texas’ lack of an income tax is a prime driver in fueling North Texas’ economy.
“It’s competitive, in regards to its tax rules,” Stephens said. “The city of Austin still collects money. The city of Dallas still collects money. But we don’t have an income tax situation that is non-competitive. Globally, we’re not there.”
Globally, Stephens said, countries have an average tax rate of about 20 percent, while the U.S. has a 35 percent rate, plus another 5 percent for state income taxes. That lower tax rate is spurring investment in those countries, he said.
Politico Chief Economic Correspondent Ben White, who moderated the event, asked Stephens what AT&T might do with the tax break that may result from the tax plan proposed in the House.
“If a version of the tax bill passes, much like it’s come out of the House, with a competitive tax rate in the 20 percent area, with incentives for investments, we will increase our investments next year $1 billion,” said Stephens. “That $1 billion increase in our industry will generate 7,000 good-paying, high-quality, middle-class jobs, to build, install, maintain those network improvements.”
Stephens said increase in hiring could reduce the unemployment rate, or raise wages, by increasing demand for existing employees.
“You may say, ‘Why would a business that has 280,000 employees want to drive wages up?’” Stephens said. “When everyone’s wage goes up, they buy more of my products and services. It’s a good, old-fashioned economics. My revenue line goes up.”
A lower tax rate would redirect the investment happening overseas back to the U.S., he said.
“Our market, other than our tax rate, is the most attractive in the world,” he said. “Why would someone build something somewhere else and bring it here to sell, and incur those transportation and other costs, if it wasn’t for the non-competitive tax system?”
Stephens said companies such as Toyota choose Texas because of its competitive tax rate; he said if that strategy is applied across the United States, it would fuel the nation’s economy in a like fashion. In company-specific matters, Stephens said AT&T’s DirecTV Now streaming television subscription service has gained 700,000 the new customers for AT&T, and that its Cricket prepaid phone service has reached the 14-million customer mark.
The Year Ahead event also featured a panel discussion by Hunt Consolidated Inc.’s Jamie Beggs, economist Dr. Ray Perryman and former Congressman John Shadegg. The group expressed optimism that the North Texas region’s growth will continue, discussed current efforts to reform the U.S. tax code, and what impacts the Dallas Region might face if the North American Free Trade Agreement (NAFTA) is dismantled.
“We’re looking for compounded annual growth of 4.2 percent a year, over the next five years,” Perryman said. “The most hopeful U.S. forecast is 3 percent.”
Beggs said North Texas’ diverse economy helps immunize it from dips, adding, “I wouldn’t say I’m quite as bullish, based on where I sit in the industries that we participate in, but definitely positive overall.”
Shadegg said Congress faces a long road in its quest for retooling the tax code, but its completion is critical for the U.S. economy.
The presenting sponsor for the Year Ahead Summit was Polsinelli; gold sponsor was Blue Cross and Blue Shield of Texas; silver sponsors were Boeing, Capital One Bank and KPMG LLP.
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