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Caldeira: How Do You Hurt Franchises? Raise Tax Rates

Instead, those earnings pay down loans and are used to reinvest in their existing business, or are used to open more establishments, which in turn creates more jobs and economic output. Even the slightest tax rate increases could put both new businesses and new jobs at risk.

With unemployment still near 8 percent, raising taxes does not create even one much-needed job ó quite the contrary. While some in the media and the administration continue to say that only 2 percent or 3 percent of American taxpayers would be affected by raising tax rates above $250,000, what they donít tell you is that those top 2 percent or 3 percent represent 941,000 small businesses. If we allow tax rates to increase, 714,000 jobs would be lost immediately, according to a recent study by Ernst & Young. According to the Congressional Budget Office, unemployment would rise to 9.1 percent, and that means possibly sliding back into a recession. So Congress must carefully weigh these potentially grave consequences of raising taxes on our job creators.

Congress must work toward spending reductions and a plan to raise revenue. Small businesses need tax certainty until lawmakers in the 113th Congress can consider a thoughtful, bipartisan overhaul of the tax system that addresses rates for both corporations and individuals. Itís time for some cooperation and compromise as American businesses continue to face some of the most challenging economic times in a generation. But compromise cannot come on the backs of small-franchise business owners in the form of tax hikes. They are small businesses, but they have a big effect on jobs and the future of our country.

Steve Caldeira is president and CEO of the International Franchise Association.

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