NRF: Tax Plan Should Boost Consumer Confidence, Help Pay for Holiday Purchases
The tax bill passed in the U.S. Senate over the weekend will boost consumer confidence, and savings from the reform could be enough to pay for many families’ holiday shopping, according to the National Retail Federation (NRF). “This vote couldn’t come at a better time,” said Matthew Shay, president and CEO, NRF, in a statement. “Holiday shopping was strong throughout the Thanksgiving weekend, and a good part of the reason was optimism about the work Congress is doing to pass tax reform. Consumers and voters are beginning to realize that tax reform will create jobs, leave more money in the pockets of middle-class Americans and give our nation’s economy the biggest boost it has seen in decades.”
In fact, Shay said there could be enough savings "to give the average family a free Christmas." According to the Senate Finance Committee, a typical family of four earning the average annual income of $73,000 would see its taxes cut by nearly $1,500 a year, or $125 a month, and some estimates predict even a larger cut. The number is enough to completely cover the $967.13 the trade group expects the average consumer to spend this holiday season (the NRF is forecasting $682 billion in total holiday sales). The bill may still see some more alterations as Senate and House leaders begin to work to reconcile their two versions. (A version of the bill was passed by the House last month.)
Total Retail's Take: The NRF has been fighting for tax reform for years, and is clearly optimistic about the current effort. Why? The centerpiece is a reduction in the corporate income tax rate to 20 percent from the current 35 percent. Besides providing tax relief to consumers, cutting the tax rate would also lower retail’s unequal tax burden and free up money to reinvest in business and employees, according to the NRF. As mentioned above, however, tax reform isn't certain yet, as Senate and House leaders now must work to reconcile their two versions. As such, the NRF is asking all retailers to write to their elected officials and tell them that now is the time for Congress to pass this tax reform. We'll be tracking this bill closely and will report on its final version, as well as what it means for retailers.
Related story: Retailers Urge Senate Passage of Tax Reform Bill