By Eric Morath
WASHINGTON--FedEx Corp. (FDX) Chairman and Chief Executive
Frederick W. Smith said lawmakers should increase individual tax
rates and lower levies on corporations as part of a deal to advert
the fiscal cliff.
The outspoken business leader said such a deal would avoid the
need for across the board tax hikes and lead to job creation and
economic growth.
"In any deal to increase rates on the wealthiest Americans, you
must lower taxes on corporations," he said Thursday during a speech
to the Economic Club of Washington. That "will encourage companies
to leave money in the business, and invest it."
Mr. Smith said incentivizing more investment in equipment and
software would encourage the innovation necessary to stimulate
economic and employment growth.
To those who say raising individual rates will be a burden on
job creators, Mr. Smith said "any lawyer in the room" would be
happy reorganize those small businesses into corporations.
Mr. Smith, who founded FedEx in 1971, spoke a day after meeting
with President Barack Obama and Congressional leaders about the
pending tax hikes and spending cuts.
Following those meetings, he said he is cautiously optimistic
that lawmakers will strike a deal to advert the so-called fiscal
cliff. Mr. Smith said he believes the president will work to reduce
the regulatory burden on businesses and supports lowering corporate
taxes and limiting taxes on overseas profits.
While taking questions following his speech, Mr. Smith said it
would be "foolish" for Congress to put off reaching a deal into
early next year, warning that failing to act this month could cause
the economy to contract.
The former Marine aviator said such an idea reminds him of
pilots who thought they could push jets just a little past their
limits.
"Some of those guys aren't with us anymore," he said.
Mr. Smith blamed the current U.S. tax system, which he said
charges the highest corporate rates in the world, for discouraging
domestic investment--pushing companies to instead spend overseas.
The lack of domestic investment is causing gross domestic product
growth to stay about a percentage point lower than its 50-year
average so far this decade, he said.
Mr. Smith also identified U.S. dependence on foreign oil as a
major impediment to growth. He said the run up in gasoline prices
in the past 12 years is equivalent to a $1,300 tax on every
American family.
"We must produce as much oil and gas as humanly possible in this
country and use a lot less of it," he said. Mr. Smith said he
supports policies that encourage wider use of transportation that
doesn't rely on petroleum.
Write to Eric Morath at eric.morath@dowjones.com