Retailers concerned about a proposal to eliminate a tax deduction on the cost of imported merchandise and raw materials applauded reports that President Bush will likely postpone a push to revamp the federal tax code until 2007 or 2008.
WASHINGTON — Retailers concerned about a proposal to eliminate a tax deduction on the cost of imported merchandise and raw materials applauded reports that President Bush will likely postpone a push to revamp the federal tax code until 2007 or 2008.
Manufacturers, however, said they were disappointed.
Despite Republican majorities in the House and Senate, Bush has had trouble securing enough votes to move his economic agenda through Congress — notably overhauls of Social Security and the tax code. The president is also facing low approval ratings, flagging support for the Iraq war, dissension within GOP ranks and midterm elections next year, which lessens the Congressional appetite for major tax reform.
"This issue is too big to be pushed through Congress without full and deliberate debate of all its ramifications," said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation.
Bernstein said retailers are concerned about a proposal made by the President's Advisory Panel on Federal Tax Reform on Nov. 1 that would abolish the ability to deduct the cost of imports as a business expense.
Bush instructed a bipartisan panel to review several proposed tax code revisions and it issued a 272-page report recommending two proposals. The Treasury Department is reviewing the findings and will submit its recommendations to the President, who will then decide whether to include any of them in his fiscal 2007 budget.
Bernstein said the panel's suggestion to eliminate the deduction for the cost of imported items, "effectively [subjects] those items to the plan's 30 percent corporate tax rate and [drives] up tax costs for importers."
She said with $648 billion in general merchandise consumer goods imported into the U.S. in 2004, the estimated change would result in $194.4 billion in new taxes retailers would be forced to pass on to consumers. The NRF also believes the elimination of the deduction would violate World Trade Organization rules and possibly lead to sanctions.
Meanwhile, textile associations were concerned about a delay for different reasons.
"This is significantly disappointing ... from the standpoint that our outdated tax code is seriously damaging the U.S. manufacturing base and our ability to compete in the 21st century market," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. "We are the only industrialized nation in the world that has an income-based tax system. Everyone else has a value-added tax system, which allows them to assess the value-added tax on all imports and then rebate that value-added tax when one of their manufacturers exports."In answer to questions about whether tax reform would be on Bush's agenda next year, the White House referred reporters to the comments of Al Hubbard, the President's National Economic Adviser, at a briefing last Friday.
"The timing is unclear,'' Hubbard said. "Obviously, it's something the President cares very much about. It's a big problem. But in terms of priorities next year ... I'm going to leave it up to him to share his priorities with the American people."
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews