Retail industry adopts principles for tax reform
New York -- The National Retail Federation board of directors said Monday it has adopted a resolution directing NRF to “strongly encourage” Congress to enact comprehensive tax reform in 2013, and it set out a list of principles aimed at achieving tax policy that would boost the economy and encourage job growth.
“Now that the fiscal cliff has been avoided, the time has come to address comprehensive tax reform,” NRF president and CEO Matthew Shay said. “We want to put the economy on a trajectory to grow again, and tax reform and tax certainty are an essential part of the formula for growth.”
Shay went on to say that retailers will be unable to achieve that goal by having “political battles year after year over temporary, last-minute measures. This is the year for fundamental, comprehensive tax reform that will settle our nation’s tax policy questions on a long-term basis and provide businesses the certainty they need to grow and create the jobs that are so badly needed,” he said.
Shay said political battles such as the recent uncertainty regarding resolution of the fiscal cliff hurt consumer confidence, noting that NRF polling found two-thirds of consumers said their 2012 holiday season shopping was impacted by worries over the economy.
Meeting at Retail’s BIG Show – NRF’s annual convention in New York City – the board voted on Sunday to approve the following tax reform principles:
- Tax reform should eliminate tax credits and incentives that favor some industries over others and should replace these “tax expenditures” with substantially lower tax rates, freeing businesses to make the most economically prudent investment decisions rather than having the tax code drive decision-making.
- Tax reform should be neutral among different types of businesses, so that businesses are not favored based on their form of legal entity (e.g. C corporation versus pass-through), how they own their property (e.g. leased stores versus owned stores), or distribution channel (e.g. brick-and-mortar sale versus remote sale).
- Tax reform should not include a consumption tax.
- Tax reform should eliminate temporary tax provisions and provide certainty.
- Tax reform should provide adequate transition rules, so that businesses do not face large tax burdens based on investment decisions made in years prior to the enactment of tax reform.
“Certainty in tax policy fosters the innovation and growth that a vibrant economy provides,” the resolution said. Adoption of the principles comes as President Obama is expected to call for corporate tax reform in his upcoming State of the Union address and the House Ways and Means Committee is expected to bring up comprehensive reform this spring and bring a bill to the House floor.