FOR IMMEDIATE RELEASE
Contact:
Matthew Haller, 202-662-0770
Jenna Weisbord, 202-662-0766
mhaller@franchise.org
jweisbord@franchise.org
ON TAX DAY, IFA ENCOURAGES LAWMAKERS TO CONSIDER COMPREHENSIVE TAX REFORM
WASHINGTON, D.C., April 14, 2015 – The International Franchise Association (IFA), the world’s largest organization representing franchise owners, is encouraging lawmakers to pursue comprehensive tax reform as a way to support the franchise industry, which has consistently created more jobs and grown at a faster pace than the rest of the U.S. economy for the last five years.
“The current tax code is not working to appropriately grow the economy for small business owners,” said Robert Cresanti, IFA executive vice president of Government Relations & Public Policy. “Too often, these business owners get lost in the complex web of the tax code. Unlike, large corporations, nearly 80 percent of small business franchise owners file their business income on their individual tax returns thereby paying the higher individual rates. This is a major reason any serious tax reform effort must be comprehensive, not corporate-only. The right kind of comprehensive reform, one that lowers rates and reduces complexities in the code, would help franchise businesses grow even faster and create more jobs.”
According to the latest “Overview of the Federal Tax System” produced by the U.S. Congress Joint Committee on Taxation, 7,594,013 business tax returns are filed as S Corp or Partnerships annually, while only 1,635,369 are filed as C Corps. In addition, the number of individuals filing as S Corps and pass-through entities has increased over the last 15 years, while C Corp filings have fallen. In other words, the vast majority of businesses file taxes using individual rates, not corporate rates. If tax reform were to only address C Corp rates, small businesses – many of them franchises – would be at a severe competitive disadvantage.
A recently released quarterly update of the Franchise Business Economic Outlook prepared by IHS Economics makes clear that franchising is a significant engine of employment and growth for the entire U.S. economy. The report indicates that growth in the franchise sector will increase over the previous year, echoing the yearly forecast released in January. Specifically, the report found that the number of franchise establishments in 2015 is expected to reach 781,931 or a 1.6 percent increase while franchise employment is expected to reach 8,820,000 jobs or a 2.9 percent increase in 2015.
However, Cresanti predicted that the industry could grow even faster is the tax code were less complex and included lower rates for small businesses.
In advance of a U.S. House of Representatives Small Business Committee hearing this week highlighting the need for comprehensive tax reform that works for small businesses, in a letter of support to the committee, IFA reinforced that the current outdated tax code impedes the ability of American businesses to grow, compete and create jobs. IFA is encouraging policy leaders to come together to create simpler, more-up-to-date and more competitive tax rules for individuals and businesses.
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About the International Franchise Association
Celebrating 55 years of excellence, education and advocacy, the International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 780,000 franchise establishments that support nearly 8.9 million direct jobs, $890 billion of economic output for the U.S. economy and 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.
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