By Mike Gleeson
Director, Government Relations
On the campaign trail, President Trump promised he would do what hasn’t been done in over 30 years: overhaul the outdated tax code. His Administration appears to be following through on that promise and recently invited NGA to represent independent grocers before senior staff at the White House during a listening session on tax reform shortly after Speaker Ryan promised to simplify the tax code. Specifically, the Administration sought feedback from supermarket operators on how potential changes to the tax code could impact the industry.
The meeting brought together a small number of representatives from food related trade associations along with the deputy advisor for the Director of the National Economic Council, a senior advisor from the Treasury department, and the Chief Economist for Vice President Mike Pence.
In May, NGA applauded the House Ways and Means Committee for holding its first hearing on tax reform and released principles to guide lawmakers as they consider the proposal, including lowering the tax rate across the board, maintaining the interest expense deduction, creating parity between pass-through entities and C-Corporations, rejecting a border adjustment tax (BAT), preserving the use of last-in, first-out method of accounting, and permanently repealing the estate tax.
Many of these principals were reiterated to the White House, including the BAT. While an advisor said that the Administration is aware the supply chain for many agricultural products cannot be replaced by imposing hefty border taxes, there was little opportunity to provide any exemptions for certain products that can only be sourced from outside the United States.
During the meeting, NGA outlined numerous policies proposed in Congress that would harm most independent supermarkets. For example, the typical NGA member store spends $153,000 on capital expenditures each year. The current expensing regime allows a store to expense $500,000 and deduct the interest. The proposal from House GOP tax-writers would raise the threshold on how much could be expensed annually, but would eliminate the interest expense deduction.
It’s expected that the Administration will take the feedback it has received and incorporate it into a more detailed framework by September that the White House and Congressional Republican Leadership can reach consensus around. After that, the tax-writing committees in the House and Senate will be charged with hammering out the rest. In fact, the House Ways and Means Committee has already held two hearings on tax reform, with two more upcoming.
With tax reform still in the early stages, it’s likely there will be much more discussion as the Administration and lawmakers attempt to craft legislation. In the meantime, NGA will continue to share how changes to the tax code could impact the independent supermarket industry.
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If you have any questions, please reach out to Mike Gleeson, director of government affairs, via email at MGleeson@nationalgrocers.org.