BDO USA Partner Todd Simmens joins Yahoo Finance Live to break down the 2021 BDO Tax Outlook Survey.
AKIKO FUJITA: Welcome back to Yahoo Finance Live. As governments across the country look to recoup revenue lost from COVID-related restrictions in 2020, firms are preparing for potentially more aggressive tax policies. That's prompting tax executives to shift up their focus.
Let's bring in Todd Simmens. He is BDO's USA partner. Todd, it's good to talk to you today. You've got a new survey out really looking at how tax executives are looking at the shifts that have happened, whether it is remote work, whether it is more independent work. Give us the lay of the land here on how significant that shift has been.
TODD SIMMENS: Well, this year has been a particularly unique survey. We've spoke to 150 corporate tax executives. And of course, the uniqueness of this year is COVID and the pandemic. And most of them, a pretty vast majority, agree that they're going to have some significant tax legislative activity this year, we think. 92% of the executives agree that we will see the corporate tax rate go back up.
So if you recall, the corporate rate had gone down back in 2017 to 21%. And we think it's going to go back up to 28%. And that's what then candidate Biden had indicated. So executives are ramping up. They're getting ready for tax legislation. They're getting ready for general tax increases on the corporate and business level. We also have seen corporations really ramp up their tax staff.
They're automating things sort of that they have been forced to do so. They have really started to take technology into account. Again, much of that has been forced on them because of the pandemic, folks working from home, and sort of shifting where jobs are. So we really do think we're going to see an uptick in the tax practices generally throughout our companies.
ZACK GUZMAN: Todd, what does that mean for consumers out there, too? Because it's always interesting to see kind of how companies try and react to maybe the expectation, if 92% think that taxes are going to be going up. But what costs do you expect to maybe trickle down in terms of pricing in the new year?
TODD SIMMENS: Well, it depends on the industry, too, I think Zack. Certainly, there will be some impact, and there will be an impact to consumers. There will be an impact to service users as well. And but we think that ultimately, we're sort of going to see sort kind of a roll back up.
So if we go back to 2017, Texas with significant tax decreases, you know, quite a change from where things were prior. Now it's sort of, we're not going to go right back to those pre-2017 levels. I think we're going to see some middle ground. So that may stabilize or really lessen the impact, so to speak, on the ultimate consumer, the end user, of some of these tax increases.
AKIKO FUJITA: You've laid out the top strategies for resilience for corporate tax executives. And one of the things that struck me is just how significant the focus was on supply chain restructuring. How much of this is about bringing things a little closer to home, or is it really about just shifting up where some of those supply chains are specifically for tax reasons? What are you hearing from the executives you spoke to?
TODD SIMMENS: Well, we think a couple of things there. First of all, we do think that international tax policy is going to address just the point you're making, trying to keep things more onshore and trying to give some incentives for folks to invest and conduct business here in the US. President Biden has indicated that he would favor specific tax incentives for that. We think our executives also see that as well. We think that they understand that trying to keep businesses here in the US is a priority of this administration and should be a priority for many of them as well.
We also see that there could be sort of increases in tax to the extent that activity occurs offshore, that they'll see their tax rates or their tax bill impacted by that as well.
ZACK GUZMAN: When we look at maybe a federal versus state level difference, we've been talking a lot about states having to make up budget shortfalls here. But that's kind of waned, I think, as we've seen this recovery gaining some strength. So what are the expectations around how businesses might be grappling with states, particularly as a lot of them start to think about relocating to more tax friendly states like Texas?
TODD SIMMENS: Great point. We think states, looking at them in terms of what their needs are, states have to respond as well. States are struggling. Many of them really have revenue shortfalls, are looking for sources of income on a state level. And they're going to have to sort of revisit where they are with respect to tax policy, et cetera, and making their states, to your point, friendly to do business in.
So that will certainly, in addition to addressing tax policy, get their revenue where they need it. And so I think you will see responses throughout the states, both in increasing rates, perhaps looking at new kinds of taxes, but at the same time, on the flipside, incentives to bring business in. You'll see that as well.
ZACK GUZMAN: All right, BDO USA partner Todd Simmens, appreciate you coming on here to chat, man. Have a great weekend.