Retailers Say Tax Extenders Bill Could Provide ‘Stepping Stone’ to Comprehensive Reform

WASHINGTON--()--The National Retail Federation today urged Congress to approve legislation that would make permanent a key piece of federal tax law retailers have long relied on and give long-term renewal to others, calling the measure an important move toward badly needed comprehensive tax reform.

“H.R. 2029 is the first step toward fundamental tax reform that our economy so urgently needs,” NRF Senior Vice President for Government Relations David French said. “We hope that H.R. 2029 will be a stepping stone to more fundamental tax reform that provides U.S. businesses with a more competitive tax rate, increases investment in the United States, increases wages in the United States and helps the consumer.”

The Protecting Americans from Tax Hikes Act should be passed “to provide retailers and myriad other industries the certainty needed to create critically needed jobs in this recovering economy and to provide the critical ‘PATH’ to tax reform.”

French’s comments came in a letter to House Speaker Paul Ryan, R-Wis., Minority Leader Nancy Pelosi, D-Calif., and all other members of the House. The chamber is expected to vote on the bill as soon as Thursday.

At 35 percent, the U.S. corporate tax rate is the highest of major world economies, and failure to adopt comprehensive tax reform has resulted in lower gross domestic product, wages and consumer spending, according to a recent NRF study conducted by Ernst and Young.

The PATH Act “tax extenders” package would renew more than 50 tax provisions that expired at the end of 2014, many of which have been on the books for decades but are typically renewed a year or two at a time and often allowed to lapse. The uncertainty of their status makes long-term planning difficult for retailers and other businesses.

By sorting out which of the provisions should be made permanent, which would be extended for a short time and which would be phased out, the bill establishes groundwork “so that a final determination on their continuance will be made when Congress finally debates comprehensive tax reform,” French said.

The bill would make permanent a provision that allows retailers to depreciate remodeling and other improvements to their stores over 15 years rather than the previous standard of 39 years. The provision, which also applies to restaurants, is important because retailers typically remodel every five to seven years. In addition to helping keep stores attractive to customers and profitable, the remodeling work creates tens of thousands of construction jobs each year.

A separate provision that allows 50 percent of the cost of improvements to be written off under “bonus deprecation” would be extended for five years, and would be expanded to cover stores and restaurants that are owned rather than just those that are leased.

Section 179 expensing, which determines the amount of an investment a small business is allowed to write off entirely in the first year rather than being depreciated over multiple years, would be made permanent and its level would be increased.

The Work Opportunity Tax Credit, which gives retailers a tax incentive to hire the disabled, welfare recipients and other economically challenged individuals, would be renewed for five years.

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities, and the critical role that retail plays in driving innovation. NRF.com

PERMALINK
Read the Letter

Contacts

National Retail Federation
J. Craig Shearman
202-626-8134 or 855-NRF-PRESS
Shearmanc@nrf.com or Press@nrf.com

Release Summary

NRF today urged Congress to approve legislation that would make permanent a key piece of federal tax law retailers have long relied on and give long-term renewal to others.

Contacts

National Retail Federation
J. Craig Shearman
202-626-8134 or 855-NRF-PRESS
Shearmanc@nrf.com or Press@nrf.com