ARLINGTON, Va. — Both the Food Marketing Institute and National Grocers Association here said last week they were opposed to President Obama’s plan to allow the so-called Bush tax cuts to expire at year-end for those making more than $250,000 a year.
“It’s a horrible decision to make at this time and in this economy,” Andy Harig, director of government relations, FMI, in an interview with SN last week.
Many supermarket companies operate as pass-through entities, such as Subchapter-S corporations and limited liability companies (LLCs), and would see their taxes increase in 2013 under the proposal.
“By allowing tax rates to increase for joint filers with income above $250,000, thousands of pass-through entities will be forced to divert capital to pay Uncle Sam’s tax bill instead of growing their businesses and creating jobs,” said Peter Larkin (left), president and chief executive officer, NGA.
Harig of FMI said that in addition to potentially stifling employment, a tax increase for pass-through entities would complicate efforts at reducing the overall corporate tax rate. Obama has discussed lowering the rate to about 28%, from its current 35% level, Harig explained, and others have proposed even lower rates.
If the tax cuts are allowed to expire from those earning more than $250,000, those companies filing as pass-though entities could pay a rate as high as 39.6%.
“[Traditional] companies would have a much lower rate than pass-through, and that really raises concerns for us, and a lot of other industries” Harg said.
He said FMI supports extending the Bush tax cuts for a year to give Congress time to enact comprehensive tax reform.
NGA also said it is seeking to extend the current individual tax rates for all income levels for one year to allow for overall tax reform tax reform.
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