Retailers are speaking up about the contributions they make to the nation’s economy, in the hope that their needs will be taken into account when lawmakers rewrite the tax code.
Earlier this month the Food Marketing Institute (FMI) released its “Grocery Industry Economic Impact” analysis, which quantifies the food retail industry’s annual economic impact.
FMI’s analysis, done with John Dunham & Associates, finds that food retailers employed roughly 4.8 million workers and paid nearly $168 billion in wages in 2016. The industry also produced more than $363 billion in economic activity last year.
At the same time, the analysis makes the case that the food retail industry faces a disproportionately heavy tax burden, and argues that the $153 billion the industry pays in taxes makes it hard for food retailers to hire new employees, raise wages for current workers, and meet the demands of the new consumer and marketplace. For each person food retailers employ, they pay nearly $32,000 in taxes.
“Food retailers offer a rewarding career path and a steady source of income for job-hungry Americans,” argues FMI president and chief executive officer Leslie Sarasin. “Simply put, all Americans — from employees and their families to customers — rely on the industry’s success. Our industry needs tax relief to continue setting the table for economic growth.”
Other retail trade groups are making similar points.
“As America’s job creators and a vital economic driver, the retail industry has long advocated for tax reform that’s good for businesses and American families,” said Jennifer Safavian, executive vice president of government affairs for the Retail Industry Leaders Association. “From shore to shelf, retail generates more than $3.8 trillion annually. Yet despite the industry’s prominent place in our national economy, retailers face one of the highest domestic tax rates of over 36%. The time for tax reform is now. RILA and our members are committed to reform that lowers rates for retailers and our customers. We will continue to work with Congress and the administration to ensure reform that works for retail and our customers.”
RILA has also launched its own educational effort, in partnership with the National Retail Federation and other trade groups, to argue for the importance of the global supply chains that are critical to supporting today’s retail industry.
“Global value chains are a critical component to businesses’ success,” said Jonathan Gold, vice president for supply chain and customs policy for NRF. “The retail industry alone has millions of U.S. jobs from sourcing and logistics to finance and compliance that are part of a global value chain that is essential to providing high-quality, affordable products to American consumers. In order to achieve that goal and remain competitive, we need policies that recognize the importance of the global value chain to the U.S. economy, workers and consumers.”
Naturally, retailers are not the only companies advocating for their industry, whether the subject is tax reform or changes in regulations.
The battle earlier this year over the proposed Border Adjustment Tax illustrated the extent to which any change in policy has the potential to create winners and losers. And while retailers argued that the B.A.T. was an “everything tax” that would raise prices for consumers, proponents of the tax say it would make U.S. manufacturing companies more competitive and create jobs.
Retailers won that battle. And by emphasizing their role as employers of millions of Americans, and leveraging the fact that they are also the agents of American consumers, retailers can likely get some tax relief as well.