With ongoing discussions by Republicans and Democrats on the fiscal cliff, franchise business owners are weighing in about the impact higher tax rates would have on their business.
House Speaker John Boehner, Majority Leader Eric Cantor, and Majority Whip Kevin McCarthy met with small business owners Wednesday to discuss the danger the fiscal cliff poses to the economy. The event followed President Obama’s meetings with primarily corporate CEOs from The Business Roundtable as Republicans and Democrats work toward a solution to the fiscal cliff. IFA’s Don Fox, CEO Firehouse Subs and Mitch Cohen, Dunkin’ Donuts and Baskin’ Robins franchisee, were among the nine business owners with a seat at the table to shine light on what will happen to their business if tax rates go up on individuals earning more than $250,000, which includes many small business owners.
“They said they are willing to continue negotiations but Republicans need more detailed spending cuts from the President,” commented Cohen as he left the meeting. Fox said if a compromise isn’t reached, his stores are not going to be able to continue to expand and generate jobs. “It can be said with absolute, undeniable certainty that if an ever increasing amount of the profit earned by the hard working franchisee is taken by the government, or redirected according to government edicts, the direct effect is that it will take longer to open new restaurants, and longer to create new jobs.”
IFA President and CEO Steve Caldeira and CEO of Firehouse Subs Don Fox spoke with Lauren Simonetti on FOX News Live from Capitol Hill to give their perspective on what the fiscal cliff means for the franchise industry (scroll to the 11 minute mark to watch their segment).
Each new franchise creates on average 40 jobs and with small businesses accounting for 65% of the jobs in this country (according to the Department of Labor), “it doesn’t make sense in this environment to raise taxes on anyone, especially the job creators”, states Caldeira. “There is no good outcome achieved by going over the fiscal cliff and agreeing on a fiscal deal is the first step toward creating long-term growth for the franchise industry,” explains Fox. “Of our small business owners, 80% are LLC’s and Partnerships and are already holding back until they know what tax rates are going to be.”
According to a member survey conducted by the IFA, 79 percent of members would halt growth plans if tax rates go up at the end of 2012. The IFA sent a letter to Congress by 51 CEO’s urging the fiscal cliff to be averted and for Congress to extend all current rates while creating a framework for comprehensive tax reform in 2013. Read the letter here.
The President continues to talk about the importance of small businesses to the growth of the economy, yet raising taxes on these owners is not the prescription for growth. As we talk about the impending effects of the fiscal cliff and tax rates, small business owners need to have a seat at the table talking to the President and lawmakers in both parties about what they believe will enable the creation of new jobs our country so urgently needs.
For additional media coverage, see below:
- The Wall Street Journal: Obama, GOP Each Pitch to Business
- MarketWatch: Obama spurns Republican fallback plan
- Bloomberg Businessweek: Boehner Meeting Leaves Small Businesses Doubting Cliff Deal
- FOX News: Small business owners discuss the dangers of the fiscal cliff
- FOX Business with Melissa Francis: Regulatory Environment is Depressing Growth
- National Journal: Biz Leaders Leave GOP Meeting Worried About Cliff Deal