The National Retail Federation is speaking out against the proposed business tax rate increases intended to offset the costs of the $3.5 trillion budget resolution that is under consideration this week in the House Ways and Means Committee.
NRF delivered a letter to the House Ways and Means Committee voicing serious concerns that a 26.5 percent corporate tax rate would have on the business community, making the U.S. corporate tax rate among the highest in the industrialized world. The letter also voiced concerns about the increased level of taxes on smaller retailers that use a “pass-through” model for reporting taxes.
The letter from NRF Senior Vice President of Government Relations David French states: “The dramatic increase in spending proposed in the budget resolution is a serious cause for concern given the current state of the economy. Using higher taxes on business to fund the high spending levels would have severe ramifications on businesses and consumers.”
The retail industry pays one of the highest effective tax rates of any industry, benefitting from few of the tax incentives or credits in the Internal Revenue Code. For the many retailers that are finally moving out of a loss position caused by the pandemic, a huge increase in taxes on profits would greatly hinder their opportunities to recover.
A tax increase this high would force all businesses – not just retailers – to increase prices for their products and services. That would drive inflation, ultimately meaning higher prices for consumers. Raising taxes while the economy is still recovering would likely lead to a further downturn in growth, which we simply cannot afford.
Earlier this year, NRF submitted statements for hearings with the Senate Committee on Finance and the House Ways and Means Committee on funding and financing to bolster American infrastructure. The statements featured the results of an EY study, commissioned by NRF, which found a corporate tax rate increase used to finance infrastructure will have a negative impact on the economy.
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