Trump tax cut allowed Duke Energy to reduce costs for customers ‘by over a billion dollars’: CEO
President Joe Biden in a primetime speech to Congress on Wednesday called on corporate America to pay its "fair share," referring to a tax hike embedded in his $2 trillion infrastructure proposal that would raise the rate for corporations from 21% to 28%.
But corporate America has largely opposed the tax hike, saying it could damage the still-fragile economy. The U.S. Chamber of Commerce last month called the hike "dangerously misguided," warning that the provision would "slow the economic recovery and make the U.S. less competitive globally."
In a new interview, Lynn Good — CEO of Duke Energy (DUK), one of the nation's largest utility companies — did not take a position on the tax hike. But she contrasted potential price increases with the company's response to tax cuts enacted in 2017 by former President Donald Trump, which allowed Duke Energy to cut costs for customers by "over a billion dollars," she said.
"One of the things that's unique about a regulated company, like Duke Energy, is income taxes are part of the cost of delivering electricity," Good says.
"What I mean by that is when tax rates came down, I reduced the cost of electricity to my customers by over a billion dollars," she adds. "It did not stay in the corporate coffers to Duke Energy — it flowed right to customers."
"Similarly, if taxes rise, it becomes something that we will work with our regulators and customers on to try to minimize the impact," she says.
Fifty-five of the largest U.S. companies paid no federal corporate income taxes last year, including Duke Energy, according to a study released by the left-leaning Institute on Taxation and Economic Policy earlier this month.
Over the last three years, since the implementation of the Trump tax cuts, Duke Energy took in $7.9 billion in profits but paid an effective tax rate of -15.5%, meaning it received more in tax credits than it paid in taxes, the study found. The Trump tax cuts reduced the corporate tax rate from 35% to 21%.
Warning of unintended consequences incurred by the tax increase, the business community has cautioned that it could undermine the nation's economic strength on the brink of a recovery.
"The proposal would be counterproductive to the goal of increasing economic growth and job creation," Joshua Bolten, president and CEO of the Business Roundtable, said last month. Duke Energy's Good is a member of the Business Roundtable.
Good spoke to Yahoo Finance Editor-in-Chief Andy Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
She spent the first half of her career at now-defunct accounting giant Arthur Andersen, before jumping over to the energy sector in the early 2000s and taking over North Carolina-based Duke Energy as CEO in 2013.
Today, the company boasts a market cap of more than $76 billion, providing electricity to 7.8 million customers across six states in the Midwest and the South.
Alongside the tax hike, Biden's infrastructure proposal includes $174 billion to incentivize consumers to buy electric vehicles and $100 billion to upgrade the energy grid, among other spending initiatives.
Speaking to Yahoo Finance, Good said that tax incentives for environmentally friendly infrastructure projects, like battery storage and renewables, could help the energy system retain capacity as it mitigates climate change.
"Tax incentives for electrification, electric vehicles, [electric vehicle] infrastructure, perhaps battery storage, perhaps extension of tax incentives for wind and solar," she says. "All of those things are complementary to the clean energy transition."
Duke Energy is seeking points of overlap between its climate goals and the president's, Good said.
"We are engaged in the conversation [and] looking for whether or not there's any alignment around what the president is trying to achieve and what we're trying to achieve with the infrastructure bill to achieve our climate goals," she says.
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