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Good morning. The corporate tax provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire this year. And Pascal Desroches, AT&T’s CFO and senior executive vice president, says that’s a cause for concern.
President Trump will need to extend the provisions of the TCJA, the signature tax law of his first term, by the end of 2025. If the law expires, it will mean changes to the corporate tax rate, capital expensing, the pass-through income deduction, and international taxation. It also capped deductions for state and local taxes at $10,000, doubled standard deductions, and expanded the child tax credit, according to Bloomberg Government.
“When the first Trump administration passed the tax incentives in 2017, it was really successful in stimulating investment,” Desroches said in an interview during the Barclays Communications and Content Symposium on Tuesday.
“You look at our company, we were at record levels of investment in the last several years, in part funded by the tax benefits,” he said. “We added jobs, both nationally and in individual states. So it was a good thing for the American public."
Desroches added: "I'm hopeful, based on all the discussions, that we will see an extension of those tax cuts.”
If it’s extended, you will see AT&T invest more, he said. “It will be a combination of both incremental investments and augmentation of shareholder returns,” he commented. “So we'll see how that plays out."
John Stankey, CEO of AT&T (No. 32 in Fortune 500) made a reference to TCJA during the company’s Q4 2024 earnings call on Jan. 27.
"I'm hopeful and I'm optimistic that a Washington that has one party in control can figure out how to set priorities for themselves,” Stankey said regarding TCJA. “My indications would be that from an economic growth perspective, the Republicans believe this is a key driver of what will get the economy moving in the right direction."
There’s been some pushback from lawmakers on fully extending the expiring tax provisions TCJA due to the cost. Permanently extending the TCJA would increase primary deficits by $4 trillion over the next decade, according to the Penn Wharton Budget model.
The extension of the TCJA is a “positive driver” that companies of all sizes are using to determine future planning, Dan Ujczo, a senior counsel in the law firm Thompson Hine, told me. “While it is a major data point, it is only part of the overall matrix each company is using to evaluate the potential growth from regulatory reform, unleashing the supplies of domestic resources, and potentially offsetting the costs of tariffs,” he said.