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WASHINGTON — The chief executives of Macy’s Inc. and the National Retail Federation are pressing President Obama to support retailers’ priorities, ranging from a Web tax bill to corporate tax reform in his State of the Union address.
This story first appeared in the January 11, 2012 issue of WWD. Subscribe Today.
Terry J. Lundgren, Macy’s Inc. chairman, president and chief executive officer, and Matthew R. Shay, president and ceo of the National Retail Federation, sent a letter to Obama Tuesday night outlining the significance of retailers’ contributions to the overall economy, and pointed to specific policies that could help merchants expand and hire more people.
“As you prepare your annual State of the Union address, it is clear that our nation faces deep divisions over many key questions,” they said in the letter. “But there is one pressing issue that nearly everyone from every party, faction and interest group can agree on — the need for businesses of all sizes to create the jobs needed to put Americans back to work and restore the U.S. as the leader of the global economy.”
The two retail executives said it often takes the “power of the presidency” to move Congress into action and called on Obama to emphasize retail priorities in his speech, slated for Jan. 24.
They noted that retailers support 42 million American jobs and operate 3.6 million stores, distribution centers and corporate offices in the nation. While the country boasts large national brands, independent small businesses operating just one store represent 95 percent of all retailers, they said, citing a U.S. Census Bureau statistic.
The total industry contributes nearly $2.5 trillion to the gross domestic product, or one-fifth of U.S. GDP, and pays $31.5 billion, they said in the letter. They also emphasized that retail is one of the nation’s largest employers, with twice the number of workers in health care and four times the number in manufacturing. Retail has led the economic recovery, with 17 consecutive months of sales growth.
“America’s retailers want to continue growing our economy, but to do that we need Washington to embrace common sense economic policy, remove barriers to job creation and do so without asking for more tax dollars to foot the bill,” Lundgren and Shay said.
Their top priorities are a Web tax bill that they dub “sales tax fairness,” which would broadly enable states to collect sales taxes from out-of-state merchants for the first time, regardless of whether they have a physical presence in the state. The bill is backed by traditional retailers and has support from longtime opponent Amazon.com, which improves its chances this year.
“The lack of sales tax on most Internet purchases has put Main Street merchants who create local jobs and play major roles in their local communities at a huge price disadvantage,” they said. “Many are shedding workers as they struggle to keep their doors open and cash-strapped state treasuries faced with the loss of $24 billion a year are laying off essential workers like police officers, firefighters and ambulance crews and schoolteachers.”
Corporate tax reform is also a priority for retailers, and a key presidential campaign issue as many Republican presidential candidates have put forward tax proposals to cut the corporate tax rate from its current 35 percent. Last year, House Ways & Means Committee chairman Dave Camp (R., Mich.) proposed a plan that would lower the top corporate rate to 25 percent from 35 percent and eliminate certain tax deductions and credits. The plan was endorsed by NRF and other retail groups.
“In retail, lower corporate taxes would mean lower prices, resulting in increased sales that would create jobs at each stage of the supply chain from raw materials to the consumer product on the shelf,” Lundgren and Shay told Obama.
In the area of free trade, the two executives called on Obama to avoid “succumbing to pressure from those who would apply outmoded protectionist policies to a modern global economy” in future trade negotiations and to recognize the importance of imported U.S. goods. They cited the Trans-Pacific Partnership negotiations between the U.S. and eight countries. Canada, Mexico and Japan have also expressed interest in joining the negotiations.
Additional priorities, all of which are outlined in the NRF’s “Jobs, Innovation and Consumer Value” agenda, include improving the nation’s transportation infrastructure, addressing credit card “swipe fees” that drive up prices for consumers and mandates under the health care reform law that “threaten to cost workers their jobs.”