Corporate Tax Reform? Don't Hold Your Breath

27.04.2011
Nearly half of all CFOs and other top executives (48%) don't expect reforms in the corporate tax rate structure until 2013 or later. That's according to of 1,400 company CFOs, tax directors, and members of corporate audit committees or boards in general. And when reforms are arranged in the future, the survey suggests, they will be small reductions of between one and five points from the current 35% rate.

The current in the world.

Conducted in March by accounting firm , the survey records skepticism among 34% of those asked about whether any tax-rate reduction would be passed without offsets that would reduce or eliminate their benefit to companies. The three areas where this one-third of executives expected to see negative changes are domestic manufacturing deduction, accelerated depreciation, and the use of foreign tax credits.

Of course, in corporate tax reform is hardly new -- and applies to all the various approaches to taxation presented in .

But the KPMG tax-governance survey seems to suggest there is general agreement on certain points. "As many of the survey respondents believe, it is our view that major tax reform will not happen quickly," says Hank Gutman, KPMG tax principal and director of the Tax Governance Institute, in a news release. "If rates are in fact lowered and preferences reduced or eliminated, we will see an outcome with winners and losers," adds Gutman, also a former chief of staff of the U.S. Congressional Joint Committee on Taxation. "This will occur because the use of preferences is not uniform across all businesses. Companies need to stay nimble and ensure they are in a position to respond to what develops."

Gutman observes that today's tax issues are more complex, and exist in different economic and economic conditions, compared to when the Tax Reform Act of 1986 was adopted. "Four major variables are expected to drive the current debate," he says, listing "the government's fiscal condition, the substantive reform proposals, the economic effects of the proposals, and the politics of enacting legislation."