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Home>Retailers Say Tax Reform Proposal Could Provide Major Boost for the Economy

Retailers Say Tax Reform Proposal Could Provide Major Boost for the Economy

Retailers Say Tax Reform Proposal Could Provide Major Boost for the Economy

09/27/2017

Retailers Say Tax Reform Proposal Could Provide Major Boost for the Economy

The National Retail Federation welcomed a tax reform proposal released today by the Trump administration and congressional leadership, saying the measure could provide a major boost for the nation’s economy.

“We look forward to hearing more details but this is a very positive step forward to achieving the kind of comprehensive tax reform that is needed to keep our nation’s economy competitive in the global environment,” NRF President and CEO Matthew Shay said. “This plan would provide much-needed relief for corporations, small businesses and middle-class individuals alike, and would help draw foreign capital and investment to the United States. This is the framework we need to unlock job creation and economic growth.”

“As an industry that pays at or close to the full 35 percent federal corporate tax rate, our focus is on eliminating tax breaks that benefit only a few industries and using the money saved to lower rates for all businesses,” Shay said. “If you get the rate low enough, that would benefit everyone equally and fairly without the need for special treatment that favors one sector of the economy over another. Economic studies show that this type of reform will increase investment in the United States, increase wages and help our customers. That is our No. 1 goal, and it has been for years.”

“Retailers are affected by both the business and individual sides of tax reform,” Shay said. “The relief provided to corporations and small business ‘pass-throughs’ in this plan would help ease retailers’ tax burden and free up capital for investment, job growth, higher wages and innovation. But just as importantly, the middle-class relief provided here means consumers would have more money in their pockets when they come into our stores, and that would mean a boost for the consumer spending that drives both retail sales and two-thirds of our nation’s economy.”

The 35 percent U.S. corporate tax rate is the highest in the industrialized world and compares with an average of 24.7 percent for nations that are members of the Organization for Economic Cooperation and Development. Retailers benefit from few of the deductions and tax credits that lower tax bills for other industries, and pay at or close to the full 35 percent.

A recent NRF analysis found that the average employee of a U.S. “C” corporation is paid $4,690 less per year because of high corporate taxes. The analysis said reducing the corporate tax rate to 20 percent could result in higher wages or the creation of between 500,000 and 1.5 million new jobs. A lower rate could also encourage foreign retailers to invest more in their U.S. operations, Shay said.

Tax relief for small businesses is essential to the retail industry because 98 percent of retailers are small businesses, and provide 40 percent of retail employment.

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