Hitting the Road: Majority of Executives in High-Tax States Would Consider a Move to Avoid New Tax Law Implications, Accordin...
February 15 2018 - 8:00AM
Business Wire
- While Three-Quarters Say Legislation is Good
for Business, 71 Percent Cite Negative Impact on Workforce –
- Less than 40 Percent Say Exec Teams Have Met
to Discuss Allotment of Tax Savings –
A new survey by Korn Ferry (NYSE: KFY) shows that executives
believe new tax legislation will bring both positive and negative
outcomes to business, depending on which state workers reside.
The early February 2018 survey showed that while 74 percent of
respondents agreed that the new tax legislation will help business,
71 percent believe that companies located in high tax-states face
the risk of talented employees leaving for states where the tax
burden is less.
“Organizational leaders must understand that their business
strategies and their talent strategies are inextricably connected,”
said Bob Wesselkamper, Global Head of Korn Ferry Rewards and
Benefits Solutions. “Businesses will not succeed if they aren’t
able to keep qualified talent, so compensation strategies must be
put in place to help ameliorate increased tax burdens of workers in
affected states.”
On a broad level, 51 percent of executives surveyed think
professionals who live in high-tax states should consider moving.
On a personal level, 58 percent of the executives said that if they
live in a high-tax state, they would consider looking for a job in
a lower-tax state to avoid paying more taxes, and 44 percent said
they would ask their company for a transfer.
In terms of how much the new legislation will truly affect
income, 45 percent of the executives surveyed say they believe
they’ll see more in their paycheck, with a third expecting to see
the same amount and 22 percent expecting to bring home less due to
the new legislation.
“It’s still too early to understand the full effect of the tax
law changes on business, but it’s critical that organizations keep
a close eye on the impact, and to the extent possible, adjust
compensation packages accordingly,” said Wesselkamper.
Organizations Have Work to Do to Understand Tax Law
Implications
A separate Korn Ferry survey fielded at the same time asked
executives about their organizations’ readiness for the new tax
laws. In that survey, less than half (39 percent) of respondents
said their executive teams have met to discuss high-level plans
regarding how their organizations will allocate savings associated
with the new tax cuts.
More than half (52 percent) said they have not yet been able to
quantify the savings from the new tax law, and only 16 percent say
their organization is firm on their direction on how to allocate
savings associated with the new tax cuts, with 84 percent saying
they are only somewhat firm or not firm at all on the new
direction.
When asked what would be most likely to happen in the next year
due to the tax cuts, the largest percentage said increasing capital
investments at a faster rate, followed by enhanced employee
training and development, and increasing acquisitions of new
business.
When asked what would be least likely to happen in the next year
due to the tax cuts, the largest percentage said one-time bonuses,
followed by increasing the rate of share buyback, and increasing
401K values.
“This is the most sweeping tax overhaul in decades, and it is
critical that organizations put in place comprehensive strategic
plans to address the wide range of implications,” said
Wesselkamper.
About the Surveys
The executive surveys were fielded in early February 2018 and
garnered a total of 465 responses.
About Korn Ferry
Korn Ferry is a global organizational consulting firm. We help
companies design their organization – the structure, the roles and
responsibilities, as well as how they compensate, develop and
motivate their people. As importantly, we help organizations select
and hire the talent they need to execute their strategy. Our
approximately 7,000 colleagues serve clients in more than 50
countries.
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version on businesswire.com: http://www.businesswire.com/news/home/20180215005308/en/
Korn FerryTracy Kurschner,
612.309.3957Tracy.Kurschner@KornFerry.com
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