WASHINGTON--(BUSINESS WIRE)--The National Retail Federation today welcomed comments from House Speaker Paul Ryan, R-Wis., regarding the need for permanent comprehensive tax reform that lowers rates without shifting the burden to consumers.
“Retailers agree with Speaker Ryan that the best way to grow our economy and create new jobs is to reform and simplify the tax code,” Senior Vice President for Government Relations David French said. “We see eye to eye with the Speaker on many elements, such as lowering rates by eliminating tax credits and incentives that pick winners and losers among businesses. Retailers are also pleased to hear the Speaker call for permanent reform, rather than a temporary fix, so businesses have the certainty they need to make plans for the future.”
“Speaker Ryan acknowledged that there were a number of ways to grow domestic manufacturing, and the border adjustment tax is just one idea. Retailers know that creating a new $1700 tax on consumers will wipe out the benefits of lower business tax rates. We will keep fighting for comprehensive tax reform that grows the economy without shifting the tax burden to American families.”
The United States has one of the highest corporate tax rates in the world and NRF has led the retail industry in advocating for comprehensive tax reform that would broaden the tax base and lower the rate. Retail benefits from few of the tax breaks that lower tax bills for other industries, and most retail companies pay at or close to the full 35 percent rate.
The “Better Way” tax reform plan proposed by House Speaker Paul Ryan, R-Wis., and Ways and Means Committee Chairman Kevin Brady, R-Texas, includes a provision that would, in effect, create a 20 percent border tax on imported goods by ending retailers’ ability to deduct the cost of merchandise that they import. That means retailers would be taxed at nearly the full selling price of imported merchandise rather than just their profit.
The border adjustment tax would have significant implications for retailers and other industries that rely on complicated global supply chains, including automobiles, technology, food and fuel. Analysis by NRF and many of its member companies indicates that the proposed tax would drive up costs, erode profits and exceed any benefits from a lower corporate tax rate. It would require consumer price increases of 15 percent or more to retain profitability, effectively creating a new tax paid by consumers.
The BAT would also put at risk millions more retail-supported jobs than it would theoretically create for manufacturing. A BAT could cause retailers to see tax bills three to five times the amount of their profits, threatening to drive some merchants out of business. The small retailers that make up 98 percent of the retail industry and provide 40 percent of its jobs would be at the biggest risk.
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.