Critics call bill a ‘money grab’ by the rich
Trade associations and other bodies representing foodservice and food retailers hailed Congress’ passing of the Tax Cuts and Jobs Act, but some trade unions and other organizations condemned the bill.
“This bill addresses the needs of small business and will help restaurants remain strong economic engines and job creators,” Cicely Simpson, executive vice president for public affairs at the National Restaurant Association, said in a statement.
Pamela Bailey, president and CEO of the Grocery Manufacturers Association called the act “the most significant piece of tax reform legislation in 30 years.”
“It will help spur job creation within the grocery manufacturing industry and provide tax relief for working families. The food, beverage and consumer products industry has long urged action to fix our broken tax system, which must work in favor of both consumers and manufacturers,” she said in a statement.
Peter Larkin, president and CEO of the National Grocers Association said cutting the corporate tax rate was a boon to his constituents.
“For years, independent supermarket operators have tried to keep pace with a rapidly-changing marketplace while operating in an industry with high effective tax rates on just one to two percent profit margins. This new weight lifted off their shoulders will allow stores to invest more in their companies, employees, and communities,” he said in a statement.
The bill changes the corporate tax rate — from as high as 35 percent for companies with taxable income of more than $10 million to as low as 15 percent with companies with taxable income of $50,000 or less — to a flat rate of 21 percent.
Jennifer Hatcher, chief policy officer and senior vice president for government relations for the Food Marketing Institute, said in a statement, “The bill dramatically lowers the corporate tax rate and increases expensing levels, which should help fuel improvements in technology and job growth within the industry.”
The bill allows for deducting all investments in capital improvements, except for the purchase of real estate, in 2018 rather than amortizing it over several years.
Hatcher added, “While we would have liked to see more progress in certain areas such as greater parity between the corporate and pass-through rate and full repeal of the estate tax, we’re grateful for a number of changes made during conference, such as allowing estates and trusts access to the reduced pass-through rate.”
Restaurant operators also were fulsome in their praise of the new tax structure.
“Small businesses and local franchise owners have long been held back by repressive tax legislation, preventing them from seeing their true growth potential,” Michael Abt, CEO of 360-unit Huddle House, said in an email. “We’re hopeful that this new tax bill will provide our franchise partners the opportunity to continue growing their businesses and provide more local employment opportunities. Small businesses are the backbone of the economy; it’s time they get the relief they deserve.”
Ricardo Cardenas, chief financial officer of Darden Restaurants Inc., said in a second-quarter earnings call with analysts on Tuesday that he expected a 25 percent effective tax rate in fiscal 2018.
“This outlook does not contemplate any potential impacts from the pending tax legislation,” Cardenas said. “Based on the information we know today, we anticipate that the tax legislation will have a benefit to us in terms of our effective tax rate going forward.”
But given the complexity of the legislation, Cardenas added, the company is uncertain at this point of its impact. “We plan to update our fiscal 2018 outlook in early January to reflect the impact of tax legislation,” he said.
However, advocacy group Americans for Tax Fairness, which advocates for higher taxes on the wealthy and large corporations, called the act a “monstrosity.”
“It’s a money grab by the richest 1 percent and the wealthiest corporations, period,” executive director Frank Clemente said in a statement, arguing that the tax cut would be paid for by raising taxes on working families “and raiding Social Security, Medicare, Medicaid, and other critical services they cherish and depend on.”
David Levine, president, CEO and co-founder of the American Sustainable Business Council, said the bill “fails as corporate tax reform because it cuts the wrong taxes at the wrong time. Cutting corporate and pass-through taxes now, during this strong business cycle, will not achieve the growth Republicans say it will. Instead, the plan will boost the deficit, risk inflation and require future cuts to infrastructure, research, and education investments that all businesses rely on as key building blocks.”
William Samuel, director of the government affairs department of the AFL-CIO, a federation of trade unions, said in a statement that the bill “is a job killer that gives huge tax breaks to wealthy corporations that outsource jobs at the expense of working people.”
He added that those working people would pay the price in the form of lost benefits to entitlements such as Medicare and Medicare, “as Republican leaders have already announced their plans to use the deficit they have created as an excuse to cut benefits to working people.”
He also predicted “job killing cuts to education, infrastructure, and other essential services that will result from lost federal revenues and from limiting the deduction of state and local taxes.”
The bill limits deduction of state, local and property taxes to $10,000.
Contact Bret Thorn at [email protected]
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