shirley leung

CEOs don’t buy the trickle-down promises of the tax bill

Michael Dell, chairman & CEO of Dell Technologies, spoke in Boston this week.
David L Ryan/Globe Staff
Michael Dell, chairman & CEO of Dell Technologies, spoke in Boston this week.

Republicans are pushing tax plans that only corporate America and the rich could love. Or so we thought.

“We don’t actually like it,” said Michael Dell, who runs the computer behemoth Dell Technologies. “We have been very vocal with the legislators about what we think is not so great.”

Eastern Bank CEO Bob Rivers said that every business would benefit from the lower corporate taxes being pitched by Republican leaders, but if the goal is to boost the economy, he’s not sure trickle-down economics is the answer.


“It was proven in the ’80s that just doesn’t work,” said Rivers, who does not align himself with either major political party. “I really have no personal hope that cutting corporate taxes would lead to any greater investment in the economy. The economy is actually doing pretty well.”

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So let me get this straight. The GOP is pushing wildly unpopular proposals that threaten to gut the middle class — and some of the very people who stand to reap the rewards don’t see the logic of it all.

Top White House economic adviser Gary Cohn will have you believe that big CEOs, as he has put it, are the “most excited group” about the tax plan.

Republicans will also have you believe that companies are going to take the savings, expand, create jobs, and even raise wages.

But what I keep hearing and reading about in earnings calls is that companies are instead likely to reward shareholders.


Other executives bristle at the idea that tax cuts will drive hiring and boost paychecks.

“Totally ludicrous. That’s not how business works,” said Nicole Sahin, CEO of Globalization Partners, a Boston firm that helps companies expand overseas without setting up foreign branches. “I don’t look at my taxes when assessing how to pay people. I look at how valuable people are, how much I want to keep them, and what the market is doing.”

Sahin, who said she leans Democratic and has donated to the party, can think of better ways for Washington to help entrepreneurs like herself. Congress should invest in education because companies need more skilled workers, she said, and it should make child care and college affordable to all, while maintaining a health care system that people can afford to use.

“I don’t think that cutting taxes is the key,” she said. “Improving social services would actually be really great for improving business.”

The tax bill, which voters disapprove of by a wide margin, is being debated this week on the Senate floor.


It should be said that there are principles in the tax plans that captains of industry can support. The executives believe the US corporate tax rate is too high, compared with rates in other countries around the world. They believe the United States should move to a so-called territorial system in which businesses would pay US taxes only on profits they earn here in the United States. That’s different from the current system, in which companies are also liable for taxes on overseas profits.

‘Totally ludicrous. That’s not how business works. I don’t look at my taxes when assessing how to pay people. I look at how valuable people are, how much I want to keep them.’

Both House and Senate versions propose such a territorial system, and it’s the chief reason General Electric Co., which does business in 180 countries, supports the Senate’s tax overhaul plan.

As unhappy as Dell is with the current versions of the tax bills, he also wants the United States to change the way it treats foreign income from American companies.

“The territorial issue is a big problem,” said Dell, whose federal political contributions skew Republican. The Austin, Texas-based executive was in town this week to speak at the Boston College Chief Executives Club luncheon and meet with the Globe’s editorial board.

“The net result is you have American companies that make money overseas, and they don’t bring it back,” he added. “Then somebody says, ‘Oh, we need a new factory, but where’s our money?’ Well, it’s overseas, so let’s build a factory there.”

Dell’s objections to the current tax overhaul effort center around provisions related to not grandfathering preexisting debt and new excise taxes on products coming into the United States, which he calls “unfair and not a good thing.”

But wouldn’t lowering corporate rates be worth it?

“If you have to do these things to lower the rates, then I think it’s a bad idea,” Dell said.

Joe Tucci — the former EMC honcho who last year sold the Hopkinton data storage company to Dell — told me he’s not committed to any specific plan but believes the country needs to overhaul its tax system.

“Having the highest corporate tax rates in the world for global companies cannot have a good ending. We’ve got to address it. You’ve got do it fairly,” said Tucci, who is now a private equity investor and doesn’t affiliate himself with either major political party.

“You have to think about personal taxes at the same time. . . . Doing them in isolation is probably not the best thing to do. It’s very complex. You are going to have winners and losers, and any time you have winners and losers, you have problems.”

Of course, talking to all these former and current CEOs made me think they’ve got to be happy about their own personal tax returns, because the GOP proposals favor reducing taxes for the wealthy.

Well, I’d be wrong again.

“You’ve got to make sure these tax cuts go to the middle class. That’s who needs the break. Not the rich,” said Tucci, who received a multimillion-dollar “golden parachute” package after the sale of EMC. “The rich are going to be just fine.”

That’s similar to what New England Patriots owner Bob Kraft apparently told his buddy President Trump over dinner earlier this year.

Rivers, the Eastern Bank CEO, feels the same way after reading estimates of how much someone in his household income bracket would save.

“I have had the conversation with my wife: ‘Geez, as much as we hate the plan, this is how much we personally benefit. So what do you think we should do with the money?’ ” Rivers said jokingly.

But then he turned serious.

“That’s the problem with this plan. The very high earners who really don’t need it benefit the most.”

He has a better idea for how the famously dysfunctional Congress can help business, instead of passing a flawed tax plan: “Stop fighting.”

Shirley Leung is a Globe columnist. She can be reached at Follow her on Twitter @leung.