Kiddar Capital CEO Todd Hitt on Varney & Co:
"Tax Reform Will Help Us Hit 4% Growth"
December 21, 2017
Kiddar Capital CEO Todd Hitt explains on Varney & Co. why capital from the Tax Cuts and Jobs Act will be invested in growth and higher wages.
Varney: The next tax fight, in my opinion, will be in those high-tax blue states. Let’s bring in Kiddar Capital CEO Todd Hitt. Now, you’re a fan of the tax plan, despite the effect on these states, is that correct?
Hitt: I am, Stuart. I think competition is good, and competition between states for taxation is also good for us.
Varney: But it’s really going to hit these blue states, I mean, California, New Jersey, New York — I say, they really have to change their ideas about economics, don’t they?
Hitt: Yeah, they’ll have to get creative about how they tax, they’ll have to be deductible. They’ll keep wealthy residents because it’s probably not going to be a major impact on them, but middle class, I mean, obviously it’s huge and they’re going to have to change their tax system in order to keep those people in their states — or the competition is going to take them. They’re going to move. It’s pretty simple, economics, student.
Varney: Yes, it is. Exactly right.
Hitt: We have to deal with this in the private sector every single day. I see 360° from construction all the way to venture capital, and you’ve got to be competitive. The states are going to have to get competitive.
Varney: Now, we’ve put on our screens throughout the show today several big companies which are going to immediately pass along the benefits of tax cutting, going straight to their own workers in the form of higher wages, bonuses, more hiring, et cetera. Is this just the beginning? Do you think there are going to be more companies coming out and saying, yeah, we’re passing the money direct to the economy?
Hitt: I think it is, and Stuart, it’s important to debunk the talking points that come out on the TV regularly. This whole thing about corporate America sitting on record corporate profits — while it’s true, there’s a reason for it. We went through a financial crisis in 2007 and 2008 that made corporate America leaner, smarter, more efficient, better corporate governance. This is all good news, the fact that we’re sitting on this kind of capital. The fact that we’re now getting this historic tax reform — that capital is not needed to sit on.
You will watch that capital, it will be invested. It will be invested in higher wages, it’s going to be invested in expansion. You’re going to see everything that corporate America, when they really get out there and start digging, can do. And it’s going to show up in growth and expansion and higher wages.
Varney: Last 30 seconds — what are you telling your clients at Kiddar Capital, what are you telling them about the growth rate for our economy next year?
Hitt: Four percent and above.
Varney: Woah! Four percent and above, really?
Hitt: You’re going to see something, Stuart, out in the American economy right now. It’s bubbling — and again, I see it 360 °— it’s been bubbling for a year now. It’s ready to break out.
Varney: This is fascinating stuff.
Hitt: All the old economic models, Stuart, are going to have to be rolled up and thrown in the trash, because when a tax reform like this comes 8 years into what economists would call a cycle, it sort of debunks the cycle arguments and their normal scaling. I think you’re going to see a whole different sort of cycle come out of this tax reform package.
Varney: This is fascinating.
Hitt: And by the way, it’s not the end. We need more things to happen out of Washington.
Hitt: We need more leadership, not just tax reform, we need other things too. There’s a number of them that have to come.
Varney: I should’ve asked you that first instead of last!
Hitt: Well, I’ll come back and we’ll go through that another day.
Varney: Yes we will! Todd, thank you for joining us sir, much obliged to you. Thank you very much.
Hitt: Thank you Stuart, and happy holidays to all of you.
Varney: And to you too, sir.
This video was first featured on Fox Business on December 21, 2017.