U.S. Markets open in 7 hrs 57 mins
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

We must balance higher corporate taxes with the need to stay competitive globally: Cisco CEO

Brian Sozzi
·Editor-at-Large
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Cisco chairman and CEO Chuck Robbins acknowledges that higher corporate taxes under the Biden administration may impact the networking giant's investment plans, and is hoping lawmakers find a compromise within their respective parties and with Corporate America.

"Well, clearly a higher tax rate ends up with us having lower profitability and so it certainly impacts all of our spending. And so I think you have to balance that, you have to balance it with R&D investment, you have to balance it with job creation, and we have to balance it with being competitive on a global basis because other companies that we compete with globally don't face that kind of tax rate," Robbins said in an exclusive interview with Yahoo Finance Live.

Robbins was referencing the corporate tax rate that president Joe Biden may have in mind as a means to help fund a $3 trillion infrastructure package expected to be unveiled on Wednesday.

Remember, then 2020 presidential candidate Biden put forth reversing half of former President Donald Trump’s signature tax cuts. In particular, Biden floated the idea of lifting the corporate tax rate to 28% from 21% currently.

Treasury Secretary Janet Yellen fanned the flames on the tax debate during testimony to lawmakers last week. “We do need to raise revenues in a fair way to support the spending that this economy needs to be competitive and productive,” Yellen said.

A visitor uses a mobile phone in front of the Cisco booth at the Mobile World Congress in Barcelona, Spain, February 26, 2019. REUTERS/Rafael Marchante
A visitor uses a mobile phone in front of the Cisco booth at the Mobile World Congress in Barcelona, Spain, February 26, 2019. REUTERS/Rafael Marchante

Numerous other tax hikes from the now Biden administration could also be in the cards, as Stifel's Chief Washington policy strategist Brian Gardner recently told Yahoo Finance Live.

Says Robbins, "So we are hopeful they will find a common ground or some sort of compromise on that [taxes]. And I understand the issues that the government is facing. I understand the challenges they are trying to deal with from a budgetary perspective. But you know capitalism and the businesses in this country are what creates these jobs, the wealth and the opportunity. We have to do a better job of ensuring that the opportunity is available to everyone in this country."

Cisco shares have largely shrugged off growing fears on Wall Street of higher corporate taxes, rising nearly 18% in the past month as the recovery from the COVID-19 pandemic gathers pace. But it's an issue that is top of mind among the institutional investors that hold shares of Cisco and other global multinationals as higher taxes likely means lower profits over time.

If those higher corporate tax rates kick in, investors could lighten their load on stocks.

"The move in the corporate tax rate and the long-term capital gains tax rate, if that were to move from the low 20s currently to the marginal tax rate, that would be a significant driver of investor behavior and I think that you could see a lot of people starting anticipatory selling to lock in things they feel are pretty fully valued," 6 Meridian founder and chief investment officer Andrew Mies told Yahoo Finance Live.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

What’s hot from Sozzi:

Watch Yahoo Finance’s live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, and LinkedIn.