The National Grocers Association (NGA), Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA) have high praise for the proposed tax reform framework published by the group known as the “Big Six.” The group is made up of Republican congressional leaders and administration officials, including House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch and House Ways and Means Committee Chairman Kevin Brady.
The framework for tax reform includes lowering the corporate tax rate from 35 percent to 20 percent; creating a new maximum pass-through business income tax rate of 25 percent; allowing for full expensing for short-lived capital investments, like equipment, for at least five years; partial elimination of the interest deduction for C corporations; and the elimination of the section 199 manufacturing deduction and other as yet unidentified business credits and deductions.
“We applaud House and Senate Republicans and the White House for continuing to pursue once-in-a-generation tax reform that will help spur job growth in communities across the country,” said Greg Ferrara, NGA SVP of government relations and public affairs. “With locally-owned independent supermarkets operating on 1-2 percent profit margins, lower tax rates would allow grocers to significantly improve their stores, hire additional staff and expand offerings. As Congress begins working to overhaul the tax code, it’s crucial any proposals to pay for the lower rates do not fall solely on the back of the businesses lawmakers are attempting to support.”
FMI: Grateful for proposal
Andrew Harig, FMI senior director, sustainability, tax and trade, said, “The food wholesale and retail industry is highly taxed and FMI’s members—who average a 1 percent annual profit margin—stand to benefit greatly from tax reform. We urge Congress to move expeditiously to create significant, lasting reform that focuses on lowering effective rates, creating tax parity among all industries and simplifying the complexity that hinders job growth.
“FMI and its members are committed to working with Congress and the administration to craft tax reform legislation that works for food wholesalers and retailers, as well as American consumers,” Harig added. “We are extremely encouraged by the hard work the negotiators have put into the framework…and view it as an essential first step toward addressing the inequities and distortions in the current tax code.”
Harig said FMI is grateful for the proposal to significantly drop the corporate tax rate and the rate paid by pass-through businesses, a step he said will help create a level playing field in the marketplace.
“These lower rates will help accomplish the broader goals—shared by the negotiators, President Trump and the food retail industry—of creating jobs and driving economic growth in the sector, while also helping to guarantee that Americans continue to have the safest, healthiest and most affordable food supply in the world,” Harig said.
GMA: Best opportunity in 30 years
On Sept. 21, GMA sent a letter to President Trump and other key tax negotiators calling for action this year on tax reform that helps American consumers, spurs innovation, levels the playing field for U.S. manufacturing and creates jobs. The framework released Sept. 27 is a critical step toward vitally needed tax reform that will generate economic growth, said Pamela G. Bailey, GMA president and CEO.
“We need a tax system that puts American manufacturing on a level playing field with the rest of the world,” Bailey said. “This is our best opportunity in 30 years to enact meaningful tax reform. Congress must take swift action on bold, pro-growth tax reform to provide much-needed relief to American families and the businesses that create jobs for American workers.”
GMA pointed out that the food, beverage and consumer products industry plays a unique role in America as the single largest U.S. manufacturing sector, with 2.1 million jobs in 30,000 communities across the country. As a critical driver of the economy, the industry touches the lives of every American family every day.
“As more details are provided, we will review these tax reform proposals against a set of core principles embraced by the food, beverage and consumer products sector,” Bailey said. “Our industry supports a lower tax burden for hardworking Americans, lower tax rates for American employers and a globally competitive, territorial tax system. Tax reforms should fuel consumer purchasing power and business investments in innovation, which will generate more job growth for American families.”
For individual taxpayers, the framework for tax reform includes a consolidation of tax brackets from seven to three, with rates of 12 percent, 25 percent and 35 percent; a standard deduction of $12,000 for single filers and $24,000 for married filers; elimination of some as yet unidentified deductions; preserving tax credits for work and higher education; and the elimination of the alternative minimum tax.