Darren Woods, CEO and Chairman of Exon Mobil, said last week that his company will be investing about $50 billion in the development of the US oil business over the next 5 years.
Woods said that Exxon is able to make such an investment due to the company’s strength and because of the recently-passed tax law which will slash corporate tax in the USA.
The money will be used to boost oil production in Texas and New Mexico, and to build new manufacturing facilities.
Woods added that the investments are good quality for shareholders which are made even better by the new tax landscape.
Many business leaders have come out in favor of the tax reform plan, which lowers corporate taxes from 35% down to 21%. Republicans were especially happy with the law, saying it will fuel growth and create more jobs. Democrats are not as pleased, saying the reforms favor the rich and expands the federal budget deficit.
Many businesses which form the backbone of the US economy are worried about the Trump tax reform plan and the possible negative effects it could have on the economy.
Sectors of the US economy such as construction, wind power, and electric cars might experience job shrinkage and harm done if the Republican tax plan is enacted as it is now.
The effects of the tax plan, although only in its earliest stages and nowhere near law, have already been felt in the marketplace. Vestas Wind Systems, the world’s largest manufacture of turbines used in wind power, saw its stock tumble by 9 percent. Tesla, the leading electric car maker had a stock downturn as well, closing lower by 6.8 percent. The Trump plan includes cutting the $7,500 tax break for the purchase of an electric car.
Homebuilders are also up in arms over the tax reform. The National Association of Home Builders are taking aim at the Republican’s proposal to remove the tax credit for mortgage payments. The chairman of the association, Granger MacDonald, said that congress was “ignoring the needs of America’s working-class families and small businesses.”
“The bill eviscerates existing housing tax benefits by drastically reducing the number of homeowners who can take advantage of mortgage interest and property tax incentives,” he said.
Some stocks of homebuilders’ companies lost ground. Toll Brothers fell almost 6%, among the worst casualties.
Others are happy with the plan. The US Chamber of Commerce endorsed the plan cautiously, saying the plan was “exactly what our nation needs to get our economy growing faster”, but “a lot of work remains to be done to get the exact policy mix right.”
This past week Mexican businessmen joined together at the annual Mexican Business Summit to discuss the latest business trends in this Central American country.
In a speech delivered by President Enrique Peña Nieto, the message coming from the leader was ‘if fiscal reform were not hurting it would be a sign that the bites aren’t deep enough.’
When Nieto came to power last September the Mexican business community felt it was on a honeymoon with its new leader. But the love affair is in a cooling stage now as the President seems to be behind a new tax-bill which was approved by Mexico’s lower house on October 18.
Mexican businessmen argue that the new fiscal reforms such as a junk-food and soft-drink tax will hurt business or deter investment. Whether their arguments will persuade the Senate is yet to be seen; the vote is scheduled for October 31. But a new argument is arising from business in their struggle against reform: they claim that the tax reforms show the government, which came to power a year ago come December on the promise of balancing the budget, has become corrupt.
What the tax reforms really signify, they say, is that the love affair with fiscal responsibility that has restricted Mexican economic policy ever since the peso crisis of 1994 may be just about over.