Tax Reform
Position: SUPPORT
Status: LEGISLATION INTRODUCED
History
Both the White House and congressional leaders have stated that fundamental tax reform is a key legislative priority for the 112th Congress. While an overly complex tax code and ever-increasing tax burdens seem to fall on the backs of franchisees, many in Congress believe cutting tax credits will help solveAmerica’s debt problems. As a result, the extension of tax incentives, such as the Work Opportunity Tax Credit (WOTC) and the 15-year restaurant depreciation schedule, are being increasingly threatened. One alternative is to recommend lower corporate and individual tax rates.
Summary
WOTC: The Work Opportunity Tax Credit (WOTC) encourages employers to hire people who may traditionally experience more difficulty finding jobs. Employers who hire workers from targeted groups – including former welfare recipients – are eligible for a federal income tax credit of 40 percent of no greater than $6,000 of the qualifying employee’s wage—equivalent to up to $2,400 per year per employee. Currently, WOTC expires on Dec. 31, 2011. The NFA believes permanently extending WOTC would incent franchisees to hire more employees while helping more disadvantaged workers transition toward self-sufficiency.
DEPRECIATION: The federal tax code currently allows restaurant owners to depreciate original building costs, renovations and improvements over a 39.5-year schedule. Over the past few years, however, Congress has allowed for a temporary 15-year depreciation schedule for these costs, which convenience and grocery stores currently enjoy on a permanent basis. The NFA supports legislation (S. 687, H.R. 1265) which would make permanent the 15-year depreciation schedules for renovations, improvements and new construction. By shortening the depreciation schedule, Congress gives operators cash flow to reinvest in their businesses and to create more jobs.
LOWER TAX RATES: Keeping corporate and individual tax rates low is important for BURGER KING® franchisees. Whether organized as an S or C corporation, many small businesses are currently struggling to increase net profits. After-tax income is an important source of capital for increasing jobs and reinvesting in the business. As a result, lowering the tax rate for both individuals and corporations will create stability, increase jobs and reinvigorate the economy.
Position
The NFA supports a permanent 15-year depreciation schedule for restaurants as well as a permanent extension of the WOTC. Tax incentives like these and lowered corporate and individual tax rates would increase investment and stimulate job growth.