Top Small Biz Group Asks for Sweeping Tax Overhaul

The International Franchise Association (IFA), the main lobby group for Dunkin Donuts, McDonald’s and Starbucks, says “a piecemeal, one-off approach to tax reform” in President Barack Obama's Jobs Act would not create jobs at the small business level.

The association has sent an open letter to the U.S. Senate asking it to instead “tackle comprehensive tax reform in order to improve the business environment for America's 825,000 franchise small businesses,” according to a recent statement.

The lobby group’s request comes on the heels of the Senate's failure to pass the president's American Jobs Act, which had included a temporary payroll tax cut to help small businesses hire.

IFA Chief Executive Steven Caldeira says instead of a payroll tax cut,“tax reform that provides certainty for America's 825,000 franchise small businesses is the best way for Congress to help small businesses create jobs now.”

He adds in the statement: "While IFA supports a lower payroll tax rate for employers, we strongly believe a more comprehensive approach to tax reform that includes permanent cuts to both the individual and corporate tax rates is the only way for our members to truly make long-term decisions about growing their businesses and creating new jobs."

IFA says franchise businesses support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy, according to a report by PricewaterhouseCoopers.

"It is clear that short-term, temporary band-aid approaches to tax reform do not help stimulate job growth by small businesses, which are responsible for creating 64% of new jobs," says Caldeira in the statement. "Franchise small business owners do not base decisions about hiring new employees for the long-term with a short term extension of tax cuts for one or two years. What will allow franchise businesses to hire, grow and expand are permanent changes to the tax code for both individuals and corporations, especially with many of our country's small businesses filing taxes as individuals."

IFA also says in the statement that it wants “additional tax extenders to be made permanent, including the 15-year depreciation provision for restaurant improvements, new construction, retail improvements and leasehold improvements, which expire at the end of 2011."

It adds that “franchise small businesses also face the prospect of the higher tax rates after 2012 when individual tax rates could be as high as 39.6%,” once the extension of the Bush tax cuts expire, as well as more tax hikes in 2013 when the president’s health reform bill enacts a “3.8% surtax on ‘unearned’ net investment income” in order “to help pay for Medicare.”