The President today signed into law an extension of the payroll tax cut for employees, meaning the 2 percentage point reduction in the tax will be extended through the end of the year. The payroll tax funds Social Security and extends unemployment benefits for Americans who have been out of work for an extended period of time. Congress overwhelmingly passed the $143 billion measure on Friday.
In signing the extension, President Obama said that Congress “did the right thing” by extending payroll tax cuts for millions of Americans.
According to the White House, President Obama will now seek to find additional issues where Congress can agree, despite the conventional wisdom that the elections in November will make bargaining difficult.
Whether that includes an effort to undertake comprehensive tax reform or to allow the current Bush-era tax rates to expire remains to be seen. IFA believes the President’s 2013 budget proposal would raise taxes and hold back job creation and that franchise businesses need the certainty of comprehensive tax reform rather than the piecemeal approach of corporate tax reform that does not address individual tax reform.
An IFA survey of franchise businesses shows franchise growth would be significantly impacted by the President’s budget proposal. In the survey, 88 percent of franchisors and 73 percent of franchisees indicated that higher tax rates on households earning more than $250,000 per year will negatively impact their business. More than 40 percent and 25 percent, respectively, say the impact will be significantly negative.
Following the bill signing today, IFA President & CEO Steve Caldeira released the following statement applauding the extension, yet calling on Congress and the Administration to find agreement on comprehensive tax reform to provide the certainty America’s small business owners need to put the country on a sustainable path to long-term growth.
“The International Franchise Association applauds Congress and the President for working together to pass an economic package that will send some short-term tax certainty through 2012 to the nation’s small business owners. While passing the payroll tax extension is important, the new law does not address the more pressing need for comprehensive tax reform at both the corporate and individual levels, which unlike the payroll tax extension, would not contribute to the mounting federal debt, but rather enable consumer confidence, spending, job creation and the economic growth our country so urgently needs.
“IFA will continue to diligently press Congress and the Administration for the need to implement comprehensive tax reform that lowers both corporate and individual rates. The franchise industry, which is comprised of 825,000 franchise establishments and supports nearly 18 million jobs, looks forward to working with Members of Congress and the Administration in developing pro-growth policies, including comprehensive tax reform that will create jobs and help speed up the economic recovery.”
Posted by Matt Haller, IFA Sr. Director of Communications