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President Signs Tax Cut Law

photo/Chuck Kennedy, White House 12/17/10

WASHINGTON, D.C. — Late Friday afternoon President Barack Obama signed into law a two-year extension of tax cuts that were about to expire, as well as additional tax cuts. The U.S. House of Representatives had voted its approval the night before. The President was flanked by Vice President Joe Biden and other members of Congress.

President Obama stated, “This bipartisan effort was prompted by the fact that tax rates for every American were poised to automatically increase on January 1. If that had come to pass, the average middle-class family would have had to pay an extra $3,000 in taxes next year. That wouldn’t have just been a blow to them — it would have been a blow to our economy just as we’re climbing out of a devastating recession.”

Misty Chally, deputy executive director of the Coalition of Franchisee Associations, a federation of Burger King, Pizza Hut, Dunkin’ Donuts, Little Caesars, Subway and other franchisee groups, observed, “While the intent of the bill is to extend many of the 2001 and 2003 Bush tax cuts in order to spur the economy, there are many aspects which will  help franchisees.” Ms. Chally went on to say that the new law will continue the current tax rates for all as well as provide a two percent reduction in social security payroll taxes for employees.

The National Automobile Dealers Association, an independent franchisee association of car dealers, stated that parts of the law were due to their franchisees’ grass-roots efforts, particularly a provision that set estate taxes at a limit of 35 percent with a $5 million per-spouse exemption for 2011 and 2012. NADA declared that due to dealers' efforts an amendment by Representative Earl Pomeroy (D-ND) to water down the estate tax cuts was defeated.

One rare sight was the presence of U.S. Senate Republican Leader Mitch McConnell (R-KY) next to the president for the signing. Earlier in the day, the Senator stated on the Senate floor, “Republicans have fought hard for this legislation. Up until last week, most Democrats resisted. But in the end the American people were heard. And that’s a welcome change from the past two years.”

Chandrakant “CK” Patel, chairman of The Asian American Hotel Owners Association, praised the continuation of the tax cut by the President. Patel emphasized that the tax law would help franchisees. “It helps small businesses,” he said. “It allows hotel owner families to make up to $10 million in tax-free gifts to their children.” AAHOA’s members own over 20,000 U.S. hotels.

On the other side, the International Franchise Association (IFA), a trade group that largely represents the interests of franchising firms, also praised the President and the bipartisan effort in Congress to pass the law. “While IFA believes the best solution for franchise small businesses is a permanent extension of the current tax rates, this agreement represents the best possible outcome to avoid a tax increase on small businesses next year,” said the IFA’s chief executive officer, Steve Caldeira. Caldeira, who was a previous executive of franchisor Dunkin' Brands, was appointed last month to the U.S. Chamber of Commerce committee of leading 100 associations.

The IFA stated that the measure includes key relief for both franchise owners and franchisors by continuing a shortened depreciation schedule for new construction and improvements to restaurants.

At the signing ceremony, the President declared, “Millions of entrepreneurs who have been waiting to invest in their businesses will receive new tax incentives to help them expand, buy new equipment, or make upgrades -- freeing up other money to hire new workers.”

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