After more than three decades, Congress finally passed much-needed and long-overdue tax relief for millions of families and businesses. For Maine and its nearly 9,000 retail establishments and more than 80,000 retail jobs, this is a welcome relief for small businesses.
We owe Sen. Susan Collins a heartfelt “thank you” for helping push the Tax Cuts and Jobs Act over the finish line. As she has done many times throughout her career, Sen. Collins was a critical force during the negotiations and was able to make significant changes to the bill addressing some of her major concerns.
SMALL COMPANIES ARE BIG WINNERS
We elect all of our congressional representatives to work hard for the people of Maine, and if these issues were all easy, all four would vote the same way each time. However, the issues are often complex and the process can be frustrating, but we rely on our elected officials to work hard and make informed decisions. Tax reform is a great example of that, and Sen. Collins used her leverage wisely to improve the bill.
Retailers in Maine have been advocating for tax reform for years, calling on Congress to push against tax breaks that benefit only select industries and instead use that revenue to lower rates for all companies, including small businesses. The retail industry is Maine’s largest private-sector employer and contributes $1.5 billion to the state gross domestic product, according to a report by PricewaterhouseCoopers. Maine deserves legislation that will help generate jobs and economic growth.
While some critics will argue that this tax bill only benefits large companies, that is simply not true. They need to remember that 95 percent of retailers operate in just one location and 98 percent of retailers have 50 or fewer employees. Retailers are truly small businesses, and it’s clear they will be much better off under this bill.
Not only will Main Street retailers see the lowest tax rates in decades, they’ll benefit from a fairer and simpler tax code that leads to lower compliance costs. According to the National Taxpayer Advocate, small businesses spend nearly $16 billion complying with our nation’s complicated tax code, which is money that could be better spent on growth, job creation and higher wages. The Tax Cuts and Jobs Act will free up resources for retailers in a variety of ways, including by simplifying inventory accounting rules and promoting capital investment.
RETAILERS GET BADLY NEEDED RELIEF
Here are the three main reasons why passage of this new tax bill is good for Maine’s retail industry and the state as a whole:
• First, it addresses retail’s high, unequal tax burden: This legislation cuts business tax rates and closes loopholes, thus lowering retail’s high and unequal tax burden and leveling the playing field for the industry. Retail currently pays the highest effective tax rate of any industry, the National Retail Federation has found. Most tax breaks and loopholes are not applicable to retail.
• Second, it will enable reinvestment: By lowering retail’s tax burden, this bill will enable employers to reinvest in their businesses and employees. That means stronger retailers, better pay and more jobs.
• Third, it provides vital tax relief to consumers: Consumers will receive much-needed tax relief and therefore, increase discretionary income. By one estimate, a family of four with an income of roughly $73,000 would save $1,500 each year in taxes. More consumers with more money to spend would be a long-lasting boon for retailers.
HELPING STATE BE COMPETITIVE
While the new tax bill isn’t perfect, it goes a long way in helping retailers and their employees. It creates a fairer tax code, triggers reinvestment in Maine and the rest of the country and boosts the spending power of consumers. These are all key ingredients for retailers in Maine to continue to grow and for our state to stay competitive.
As the bill continues its way through the final process of a committee of conference and additional votes in the House and Senate, we have no doubt that Sen. Collins will be a respected, thoughtful voice and continue to do the best she can for Maine.
Curtis Picard is president and CEO of the Augusta-based Retail Association of Maine.
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