NEW YORK (AP) — Hillary Rodham Clinton said Friday that businesses need to “break free from the tyranny” of focusing too closely on quarterly earnings reports and take a longer view of the economy to boost wages.
The Democratic presidential frontrunner said she would seek to change the tax structure by raising capital gains taxes while also reviewing executive compensation rules and addressing shareholder activism that often encourages companies to focus on short-term profits.
“It is clear that the system is out of balance,” Clinton said at New York University’s Stern School of Business. “The deck is stacked in too many ways and powerful pressures and incentives are pushing it even further out of balance,”
Clinton’s speech on economic growth and fairness offered some of her most detailed prescriptions for the economy as a presidential candidate. But much of it was overshadowed by fresh reports that federal investigators had asked the Justice Department to look into whether classified or sensitive government information had been transmitted from Clinton’s personal email server while she served as secretary of state.
Clinton said at the outset that there had been “a lot of inaccuracies” in the reports and reiterated that she had released 55,000 pages of emails and would answer questions from congressional investigators.
On the economy, she said part of her agenda is meant to help young workers who have struggled in the aftermath of the 2008 financial crisis. Corporate America would need to take the lead in focusing on long-term growth, she said, but she aimed to help with that realignment.
“American business needs to break free from the tyranny of today’s earnings report so they can do what they do best: innovate, invest and build tomorrow’s prosperity,” she said.
The centerpiece would be her plan to raise capital gains taxes for wealthy investors — couples earning more than $465,000 a year — through the creation of a six-year sliding scale. Under her plan, the capital gains rate for the top income bracket would be 39.6 percent if the shares were sold within a year, matching the top rate for ordinary income levels. After two years, the rates would decline, reaching 20 percent after six years.
Republicans and conservative-aligned groups panned the approach, saying it would create new complications for business and wouldn’t help the economy.
Americans for Tax Reform, a group founded by conservative activist Grover Norquist, said in a statement the plan would “only serve to distort capital markets” as investors buy and sell based on taxation considerations instead of “rational market signals.”
Clinton would also offer tax incentives for small businesses, offering zero capital gains taxes on certain small business stock held for more than five years. And she would offer to eliminate capital gains taxes for certain long-term investments in hard-hit areas like inner cities, the Rust Belt, coal country and Indian country.
On executive compensation, Clinton said the tax code created incentives for CEOs and others to sacrifice long-term value in exchange for short-term boosts to the company’s stock price. She urged a reexamination of that approach.
“There is something wrong when senior executives get rich while companies stutter and employees struggle,” she said.
Clinton said she would seek a review of shareholder activism, arguing that some “hit and run” activists can have an unhealthy influence on corporate decision-making. And she outlined plans to seek a review of stock buybacks, which she said are often used by companies to boost share prices at the expense of long-term investment like research and development.
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