Tax Reforms, Not Payroll Tax Cuts Says IFA
A bill put forth by President Obama aimed to create jobs via payroll tax cuts and a $447 billion package for infrastructure projects is facing opposition in Congress and small businesses. Newsmax.com reports that the International Franchise Association, in a letter to the Senate, says it prefers permanent tax reforms in lieu of this temporary payroll tax breaks. Tax reforms will allow small businesses to create jobs now.
The U.S. economy stands a 40 percent chance of falling into a new recession within a year if Congress doesn’t pass a White House-sponsored jobs bill, says Mark Zandi, chief economist at Moody’s Analytics.
The bill, put forth by President Barack Obama, is a $447 billion package designed to create jobs via payroll tax cuts and investments in projects like infrastructure.
“All of the proposals are temporary. All of the temporary proposals are being paid for. So it’s not adding to the deficit, or the debt, or to the size of government,” Zandi tells Slate, an online publication. ”But if you go into recession, then yeah, the deficit will be a lot larger, and government measured by spending will be bigger.”
If anything merits attention in the bill, it’s the call for payroll tax cuts.
“The extension and expansion of the payroll tax holidays for workers would be number one on my list and key to avoiding recession,” Zandi says.
The bill has faced opposition in Congress, although Zandi says he’s counting on growing Republican support for items outlined in the bill.
“I’m counting on it. If I thought they wouldn’t, then I would say that I think we’re rolling into a recession. I expect them to do it,” Zandi says.
Someleaders, however, says President Obama’s Jobs Act doesn’t go far enough.
The International Franchise Association (IFA), a lobby group for Dunkin Donuts, McDonald’s and Starbucks, describes the bill as “a piecemeal, one-off approach to tax reform.”
In a letter to the Senate, the IFA says broader tax reform as opposed to temporary breaks in payroll taxes will lead to more lasting cuts to unemployment rates, which remain high at 9.1 percent.
IFA Chief Executive Steven Caldeira says instead of a payroll tax cut, “tax reform that provides certainty for America’s 825,000 franchise small businesses is the best way for Congress to help small businesses create jobs now,” according to Fox Business.
“It is clear that short-term, temporary band-aid approaches to tax reform do not help stimulate job growth by small businesses, which are responsible for creating 64 percent of new jobs,” Caldeira says in the letter, Fox Business adds.
“Franchiseowners do not base decisions about hiring new employees for the long-term with a short-term extension of tax cuts for one or two years. What will allow franchise businesses to hire, grow and expand are permanent changes to the tax code for both individuals and corporations, especially with many of our country’s small businesses filing taxes as individuals.”
Photo by Mike Huggler