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White House Corporate Tax Rate Proposal Good News for Retailers

The Obama Administration has proposed to reduce the corporate tax rate from the current rate of 35% – the second highest in the world after Japan – to 28%, eliminate several tax loopholes and virtually eliminate offshore tax shelters. This is considered good news for retailers. According to the National Retailers Federation (NRF), “Retailers benefit from few of the tax provisions enjoyed by other industries, and consequently pay among the highest effective rates of any U.S. industry, often at or close to the full 35 percent statutory rate.”

According to Matthew R. Shay, CEO of the NRF, “Tax reform that would eliminate these breaks in return for lowering rates for all businesses would significantly boost employment.” Shay also stated in a letter to the President, “In retail, lower corporate taxes would mean lower prices, resulting in increased sales that would create jobs at each stage of the supply chain from raw materials to the consumer product on the shelf.”

Of the more than 156,000 clothing retailers in America, 83% are corporations that currently pay the 35% corporate tax rate. The reform comes at a crucial time for the industry, as retail sales increases have fallen to 3.4% annually, lower than 2011 when sales grew 4.7%, and many retailers have not yet gained back ground lost during the Great Recession.

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