The Economy

Tax Breaks Gridlock Weighs on CFOs

A new survey says indecision over a bill to extend more than 50 tax breaks is contributing to CFOs' uncertainty about growth.
Matthew HellerAugust 27, 2015
Tax Breaks Gridlock Weighs on CFOs

Uncertainty about the U.S. economy is nagging at the nation’s CFOs, reflecting, in part, the gridlock in Congress over tax reform, according to Grant Thornton.

The accounting firm reports in its latest CFO Survey that finance chiefs are relatively sanguine about the future, with 48% expecting the U.S. economy to remain the same over the next six months while 43% feel the economy will improve. Only 9% see things getting worse.

But more than half (55%) of CFOs said uncertainty about the U.S. economy is a major concern that could impact their businesses’ growth in the next 12 months.

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“While the U.S. economy has stabilized, our data suggest that uncertainty related to other economic factors is making strategic planning difficult for financial executives,” Randy Robason, Grant Thornton’s national managing partner of tax services, said in a news release. “CFOs are looking to Washington, regulators, and the Federal Reserve for answers and getting nothing but indecision.”

A particular frustration for CFOs is the gridlock over a bill to extend more than 50 tax breaks, including the research tax credit, bonus depreciation, and the production tax credit, that expired at the end of 2014.

The Tax Increase Prevention Act of 2014 extended those incentives retroactively for one year, allowing businesses to claim them on their 2014 returns filed in 2015. “The question remains, will the 114th Congress revisit this act and allow the use of these tax benefits on 2015 filings in 2016?” Grant Thornton asked.

More than a third (37%) of those polled by the firm are answering “No” to that question and acting as though the extension will not occur.

“In past years, negotiations over the tax extenders bill dragged on into December — this is very troublesome and creates major headaches for U.S. businesses,” said Mel Schwarz, partner and director of tax legislative affairs in Grant Thornton’s national tax office.

Cybersecurity is also a major source of worry for financial leaders, with 44% saying the most significant cyber risks they are face are unknown risks.