The National Retail Federation has led the retail industry’s fight for tax reform for years, calling on Congress to eliminate tax breaks that benefit only some industries and to use the revenue saved to lower rates for all companies, including small businesses.
Today they got their wish. Following the House and Senate passage of the tax reform bill, which cuts the corporate rate to 21% from 35%, the National Retail Federation released the following statement:
“Passage of tax reform is a major victory for retailers who currently pay the highest tax rate of any business sector, and for the millions of consumers they serve every single day,” says NRF President and CEO Matthew Shay. “Our priorities were clear: reform must jumpstart the economy, encourage companies to invest here in the United States, increase wages and expand opportunities for employees, and protect our small business community, of which the vast majority are retailers. That’s exactly what this legislation will achieve. Most importantly, this historic tax reform will put more money in the pockets of consumers – the best Christmas gift middle-class Americans could ask for this holiday season.”
The American Apparel & Footwear Association (AAFA) has also been closely tracking the tax reform process, and continues to consult with its members large and small to understand how the new provisions will impact their companies and their nearly four million U.S. employees.
“While the worst proposals from earlier drafts have been removed, namely the BAT and the excise tax, there’s more digging to be done into these new and complex provisions,” says Steve Lamar, EVP at the American Apparel & Footwear Association (AAFA). “For those consumers and our member companies that do achieve tax relief, we trust that the industry will benefit from increased spending on clothing and footwear and increased investment in supply chain growth and hiring.”
The bill calls for deep tax cuts for businesses, which are aimed to boost economic growth. According to a Dec. 4 report from Wolfe Research, notes Retail Dive, the biggest specialty apparel winner under the Senate’s tax plan would be GAP, whose corporate tax rate would drop from 39.6% last year to 23.5% once the plan goes into place. Other big winners would include: Nordstrom, Restoration Hardware, Dick’s Sporting Goods, Williams-Sonoma and Ulta, which are expected to see their rate drop from the high 30s to between 22.3% to 24.2%.
While many consumers will indeed also receive a tax break, it might not translate into them buying more materials goods, however. Retail has noted more recently that consumers are trading fashion dollars for experiences, but the industry is optimistic about an overall boost.