On Tax Day, NRF finds it opportune to reflect on the immense benefits that the lower individual and corporate tax rates ushered in by the Tax Cuts and Jobs Act have had on both consumers and retailers alike.
Individual tax reductions have injected vitality into the pockets of millions, fueling consumer spending and bolstering the economy. Simultaneously, the corporate rate adjustments from the TCJA have catalyzed investment and economic expansion, fostering innovation and job creation.
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According to a notable economic study by the National Bureau of Economic Research, the repercussions of a higher corporate tax rate would reverberate significantly onto consumer prices, with a third of any tax increment being borne by consumers in the form of elevated prices.
Here is how lower tax rates from the TCJA have permeated and invigorated both consumers and retailers alike across the economic spectrum.
Empowering consumer spending
Lower individual tax rates have increased disposable income throughout the economy, increasing consumer spending on goods and services, including retail purchases. Increased consumer spending has driven demand, leading to higher sales for retailers across the country. It has been a win-win situation — a higher standard of living for consumers and higher sales for retailers.
Catalyzing job creation and retail employment
The retail industry is a major contributor to job creation, employing millions of Americans across the country. With a globally competitive tax rate from TCJA, retailers have been able to expand their operations, open new stores and invest in their workforce. This has led to more job opportunities for retail associates, providing more opportunities for stable employment and growth within the industry.
Nurturing small businesses
Small retailers are the backbone of the local economies, and they all benefit from lower taxes. TCJA tax rates have helped small businesses reinvest in their enterprises, upgrade infrastructure and better serve their communities. This has resulted in a more vibrant retail landscape, offering consumers a variety of choices and contributing to the unique character of every neighborhood.
Fueling economic growth and prosperity
A thriving retail sector is a key contributor to overall economic growth and prosperity, and a globally competitive corporate tax rate has helped the retail sector thrive. When retailers prosper, they pay higher wages, invest in employee training and contribute higher tax revenue through sales and corporate taxes. A strong retail industry benefits the entire economy, increasing economic prosperity for millions of Americans.
Fostering competitive pricing and innovation
TCJA tax rates have encouraged research and development and driven innovation within the industry. From technological advancements to improved customer experiences, innovation spurred by lower corporate taxes benefits both consumers and retailers alike.
With all these reasons in mind, NRF strongly supported the Tax Cuts and Jobs Act that has been so incredibly helpful in propelling both consumers and the retail industry toward sustainable growth and prosperity, serving as a catalyst for economic expansion. TCJA tax rates have meant more resources for consumers to spend, while also enabling retailers to invest in their businesses and contribute to the overall economy, making the American dream more tangible with every purchase.
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