Over Half of US Finance Professionals Say Tax Hikes Necessary Part of Deficit Agreement

Finance professionals overwhelmingly believe that clear action must be taken on deficit reduction to accelerate economic growth in 2012, and more than half think that tax increases should not be taken off the table to achieve a deficit reduction agreement, according to a survey by the Association for Financial Professionals (AFP).

The 2012 AFP Business Outlook Survey, underwritten by SunTrust, found that financial professionals believe the US economy will continue to strengthen modestly in 2012, with a median expected growth rate of gross domestic product (GDP) of 1.9%. Nevertheless, a full two-thirds reject the need for additional fiscal stimulus (QE3).

While the largest percentage of financial professionals since December 2006 is anticipating that their organisations will add staff to their payrolls in 2012, they are expecting a relatively modest net gain in payrolls of only 1.1 million for the entire US economy.

Financial professionals continue to point to uneven consumer demand, business investment and demand for US goods and services overseas as important factors affecting economic growth and job creation in 2012. They also believe these key factors will influence business conditions in 2012:

  • Managing health care costs (76%).
  • Federal budget deficit (71%).
  • Uncertainty surrounding tax policy (71%).
  • Sovereign debt crisis in Europe (71%).
  • Weak housing demand (70%).
  • Success of efforts to reduce long-term budget deficits (70%).

“CFOs and treasurers are sending a clear message: enough!” said Jim Kaitz, AFP’s president and chief executive officer (CEO). “These are practical people. They recognise that the political theatre must stop in order to achieve a resolution of the debt crisis.”

Internationally, financial professionals also are concerned about the ongoing sovereign debt crisis in Europe. Just over half of financial professionals indicate that their organisation has been affected financially by the sovereign debt crisis in Europe: 35% of organisations experienced a detrimental impact, 18% a beneficial impact. Nearly half of those surveyed expect dissolution of the euro sometime within the next three years.


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