Tax laws can have a profound impact on business decisions.
The National Restaurant Association believes tax reform must provide restaurants with greater certainty and foster an environment that encourages economic growth and job creation.
As Congress considers a more significant overhaul of the federal tax code in 2017, we urge lawmakers to conduct corporate and individual tax reform simultaneously due to the diversity of business models in the restaurant industry, including S corporations, partnerships, C corporations, etc.
Many restaurant owners pay individual tax rates, including sole proprietors and owners who pay taxes on income that comes through partnerships, S corps, LLCs, and other flow-through entities. Corporate reforms alone won’t help an industry as diverse as the restaurant industry.
Depending on the business model, effective tax rates for
restaurants can be in the mid-to-high 30s percent range which is why tax credits and deductions signed into law as part of the PATH Act in late 2015 are so important: restaurant depreciation, WOTC, bonus depreciation, Sec. 179 business expensing, food donation tax credit. If Congress considers simplifying the code by
eliminating credits and deductions, it is crucial that Congress seek input from the restaurant industry on the impact of lowering tax rates versus retaining credits and deductions in current law.
Therefore, the Association urges Congress to undertake tax reform that is comprehensive, lowering both the individual and corporate tax codes.