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 [email protected]