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The International Franchise Association today applauded passage of H.R. 8, the American Taxpayer Relief Act of 2012, a bipartisan agreement to avert the so-called "fiscal cliff," prevent tax hikes on thousands of existing and prospective franchises, and make permanent most of the Bush-era tax cuts, said IFA President and CEO Steve Caldeira.
"Averting the fiscal cliff and making current tax rates permanent for franchise business owners and prospective investors is critical to ensuring the positive growth forecast for the franchise industry in 2013 and for consumers across America," he said "While not ideal given it raises taxes on some of our most proven job-creating, small business owners who file as individuals, bipartisan solutions are necessary for our leaders in Washington to give confidence to America's small business community. Failure to act could have jeopardized our industry's growth plans and pushed the economy back into a recession."
A report released Dec. 20, 2012, by IFA and IHS Global Insight indicated an agreement to avert the fiscal cliff was necessary for franchise businesses to grow in 2013. According to The Franchise Business Economic Outlook: 2013, franchise businesses will grow at a slightly slower pace in 2013 than in 2012, yet the industry will continue to outpace growth in other business sectors. According to the report, the franchise sector is projected to create 162,000 new jobs and open more than 10,000 new franchise businesses in 2013.
Making the Bush-era tax cuts permanent and extending many business tax extenders included in the bill have been key lobbying priorities for IFA. The bill makes permanent existing income tax rates, capital gains and dividends rates for individual filers earning under $400,000 for singles and $450,000 for joint filers. The income tax rate for those above that threshold rises to 39.6 percent and the capital gains and dividends rate rises to 20 percent. The bill includes a permanent extension of current policy on spousal portability and unification of the estate tax, with a $5 million exemption indexed for inflation and a 40 percent top rate. Among key tax extenders strongly advocated for by IFA (each extended for one year) in the bill are:
While Caldeira applauded the bipartisan agreement to avert the fiscal cliff, he said the deal is not a substitute for the long-term fundamental fiscal reform the country needs.
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Topics: Franchising & Growth
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