WASHINGTON — Republican presidential candidate, Sen. Marco Rubio (Fla.) told a coalition of major business groups in a wide ranging question and answer forum Wednesday that he will lower corporate taxes across the board for businesses if elected, repeal new health insurance surcharges, build a strong cyber security defense and help relieve burdensome regulations on companies.
Rubio participated in a tele-forum and addressed questions posed by members of the National Retail Federation, National Association of Manufacturers, Associated Builders and Contractors, the Associated General Contractors, the Business-Industry Political Action Committee, and the National Federation of Independent Business.
Touting his economic proposals aimed particularly at small and medium-size businesses, Rubio said he would lower the corporate tax rate to 25 percent from 35 percent for all companies, large and small.
He also said he would establish a national regulatory plan that sets a cap on federation regulations and allows Congress to vote up or down on proposed regulations impacting businesses.
Rubio said he is opposed to an increase in the federal minimum wage, which is currently set at $7.25, arguing that it would “cost up to a million jobs” and “hurt workers” and prevent people from acquiring higher paying jobs.
Many states and some companies, such as Wal-Mart Stores Inc., have already raised their minimum wage levels. President Obama has called for an increase in the hourly federal rate to $10.10 and Democratic presidential front-runner Hillary Clinton said this week on the campaign trail that she supports an increase in the federal rate to $12.
Rubio said he believes in a “common sense” balance between workers and employers and criticized recent actions taken by the National Labor Relations Board, such as the overtime rules; rules shortening the time between a petition for a union and an election; and joint-employer rules.
On corporate tax reform, a key issue for retailers in particular, Rubio said he would lower the tax rate for all business, including small “pass through” businesses, such as S corporations, which pay their taxes through the individual income tax code rather than through the corporate tax code.
“I’ve called for a dramatic simplification of the tax code…calling for maintaining parity so that no business, whether it is small, medium or large, no matter how it is organized will pay more than a flat rate of 25 percent on business income,” Rubio said. “We would also end double taxation of capital gains, of dividends, repeal the death tax. Most important of all to small business, we would allow you to fully and immediately expense any investment you make in your business.”
Frank Julian, a vice president at Macy’s, Inc., asked Rubio about his views on tax breaks included in a legislative package known as “tax extenders” that Congress frequently must renew.
“I’m very pleased to hear your comments supporting a lower corporate tax rate. Retailers pay one of the highest effective tax rates in the country,” Julian said. “We are supportive of broadening the base and lowering the rate. Achieving corporate tax reform will take some time. Would you be supportive of a two-year extension on tax extenders so that everyone could focus attention on corporate tax reform and not have to worry whether and to what extent the tax extender will be extended every year?”
Rubio said he would support two-year extensions for some of the tax breaks but did not give any specifics on which of those he would include.
“The vast majority of American business activity is conducted by pass through companies who are paying on a personal rate, some as high 39.5 percent plus Obamacare surcharges,” Rubio said. “We want to lower those taxes too. That where the majority of our businesses are. That’s why I’ve called for a flat 25 percent tax on all business income, no matter how you are organized.”
“For extenders, I don’t want to see taxes go up on anybody, especially on business activity that creates jobs and prosperity,” Rubio said. “But I do think moving forward we need to lay the ground work on tax reform, particularly tax reform targeted to small and mid- size firms.”
Rubio was also asked about the Department of Labor’s overtime regulations unveiled in June which would extend overtime protections to nearly 5 million white-collar workers within the first year of its implementation. Under the Fair Labor Standards Act, hourly wage workers are generally paid time-and-a-half for more than 40 hours a week if they earn below a certain salary, but a white-collar exemption prevents many salaried executives, managers, supervisors and administrators from receiving overtime, according to the Obama administration. The threshold for overtime eligibility was set at $455 a week, or about $23,660 a year, in 2004. The administration said the threshold is below today’s poverty line for a worker supporting a family of four.
However, an NRF commissioned study conducted by Oxford Economics showed that the potential cost to U.S. retailers and restaurants could be $5.2 billion a year, under the assumption that businesses make no change to offset increased costs. The study also concluded that employers will likely modify their base wages so each worker would not see any real income gain and that workers could also see an equal reduction in bonuses and benefits.
“Clearly, I’m not in favor of it for a number of different reasons,” Rubio said. “One thing it does is…impose additional costs on employers across the country.”
“It’s just going to increase the cost of doing business in America,” Rubio said.
“It’s one more additional burden that will make use less competitive in comparison to the rest of the world and make it harder to hire people in America.”
Rubio was also pressed by a NAM member– who supports the Export-Import Bank–why he opposes renewing the bank’s charter, which expired in June.
“Your proposal to have more free trade agreements is really not the solution because fta’s only exist for the purpose of eliminating trade barriers and tariffs,” the NAM member said. “There are literally thousands of small business manufacturers throughout Florida who buy goods and use the Ex-Im Bank. Are you prepared to see these jobs lost if companies like Boeing and GE continue to move jobs to foreign countries that will finance their exports?”
Rubio responded by saying that 97 percent of U.S. exports do not rely on the Ex-Im Bank and argued that the largest beneficiaries of the bank are “handful of companies that have political influence.”
“There are alternatives to the financing mechanism, which the private sector will develop given the opportunity,” Rubio said. “It has grown into a behemoth that supposedly stands for boosting American exports by financing or ensuring international transactions but the reality of it is it has become more and more used in essence as bank that exists for purposes of corporate welfare and poor economic policy. “
“I think there are better ways to make our businesses competitive, including dealing with the tax code, eliminating regulations, making America a cheaper place to manufacture by lowering energy costs, providing more qualified, skilled workforce through reform and of course pursuing free but fair trade agreements in which our exported products are not discriminated against in the international marketplace,” Rubio added.