Starbucks Chairman Trashes Tax Bill As "Fool's Gold"
"This is not tax reform, this is a tax cut."
Starbucks executive chairman Howard Schultz described the Republican tax bill working its way through Congress as "fool's gold" that would do little to improve the living standards of typical Americans and instead just enhance corporate profits and stock prices.
"This is not tax reform, this is a tax cut, this is fool’s gold. If he wants to take the corporate tax rate from 35% to 20% — for what purpose? Will that profit go back to people who need it the most? Will that help small business? Will that help half the country that doesn’t have $400 for a crisis?"
Schultz was speaking at the New York Times' DealBook Conference.
The Starbucks executive, who was replaced as CEO by Kevin Johnson in April, has long been particularly outspoken among business titans about social issues. This year, under his leadership, Starbucks committed to hiring 10,000 refugees around the world and increasing the number of veterans and military spouses working at its cafes to 25,000. In an op-ed in the Financial Times in August, Schultz urged elected officials to take a stronger stance against "threats to civil liberties" after executives resigned from various business councils in the days following Trump's response to the violence in Charlottesville.
While other CEOs have supported social causes like hiring veterans, fewer have attacked the Republican tax bill.
"How many companies in America are going to take the profits that are going to be enhanced by the tax cut and put it in the communities and serve? One hundred percent will go to the shareholders," Schultz said.
The Republican tax bill, which is still being worked on in the House Ways and Means Committee and is still waiting for a companion bill in the Senate, would slash the corporate tax rate from 35% to 20%. It also would significantly reduce taxes for some businesses run by their owners, and eliminate a raft of individual tax deductions.
Business interest groups like the US Chamber of Commerce and the Business Roundtable, which is now being chaired by JPMorgan Chase CEO Jamie Dimon, have been strong supporters of a large corporate tax cut. Dimon has specifically said that he would be able to hire more workers if the tax bill was passed.
"I don’t believe that corporate America needs a tax cut, when you’re not doing anything to help students, and taking away mortgage benefits, and [people are] living paycheck to paycheck," Schultz said. "Corporate America does not need a tax cut from 35% to 20%. You need a higher level of compassion for the country."
But despite Schultz's position, Starbucks would get a big tax cut if the bill went through — the company had an effective tax rate of 31.5% this past year. When asked what the company would do with it, Schultz said, "We would not take the majority of that tax cut and provide it to corporate profits. We will find other ways to create a contribution back to either the communities we serve, or the many initiatives we have about veterans, and obviously our people."
It's long been rumored that Schultz, now that he no longer runs Starbucks' day-to-day, might have an interest in elected office. When asked specifically about such rumors at Thursday's conference by Times columnist Andrew Ross Sorkin, Schultz demurred: "I’m not thinking about that, but I’m deeply concerned about the direction of the country, I’m deeply concerned about our standing in the world, and I’m deeply concerned about the many millions of Americans who are not participating in the economy."
Venessa Wong contributed reporting.