While Dunkin’ Donuts franchise owners keep a close eye on the status of various pieces of state legislation, including the minimum wage increase and the paid sick leave act, there are new important items on the docket at the federal level that deserve some close attention too.
“One of those items is permanent 15-year depreciation,” says Misty Chally, the national director of the Coalition of Franchisee Associations, of which DDIFO is a charter member.
Federal tax code calls for depreciating restaurant improvements and new construction on a 39-1/2 year schedule. Over the past few years Congress has allowed special one-year exemptions so businesses could depreciate on a 15-year schedule. The allowance expired on January 1, 2014.
Now, a bill known as the “Restaurant and Retail Jobs and Growth Act,” introduced by U.S. Representatives Mike Kelly (R – PA), Richard Neal (D – MA) and Ron Kind (D – WI), would make the 15-year depreciation schedule the law without requiring yearly Congressional approval.
According to Chally, the bill has encountered expected resistance. “If you have more money that’s exempt from taxes, the government isn’t collecting it.”
“The foodservice industry employs more than 535,000 men and women in Pennsylvania alone, and is a constant driving force that makes our economy grow and keeps communities strong nationwide,” says Rep. Kelly. “Especially during this difficult economic recovery, it is absolutely vital that restaurant and other retail operators have the tax certainty they need to expand their enterprises and put more Americans back to work. This new jobs bill will help bring much-needed long-term stability to our nation’s small businesses, and just makes sense.”
“The Restaurant and Retail Jobs and Growth Act will help restaurants, retail outlets and other businesses by bringing stability to their long-term financial planning, while lowering their tax burden so they can expand and hire new workers,” says Rep. Kind.
Chally puts the legislation into terms for franchise owners. “It helps them to reinvest in their business and in development. It also trickles down. They hire other employees to do the remodeling work and that spurs the local economy. With permanent 15-year depreciation, you can plan for improvements. It’s hard to plan if you don’t know if it will happen that year.”
She says that it’s unlikely the bill will come up for a vote in 2014. “Right now the government is dealing with minimum wage and labor issues.”
Chief among those issues is President Barack Obama’s push to force companies to change the rules that allow employers to define which workers are exempt from receiving overtime based on the kind of work they perform. Currently, employees whose jobs include management duties are exempt from receiving overtime. Additionally, employers do not have to pay time-and-a-half to people over $455 a week. Obama wants to raise that cap.
Eric Reller, with the National Federation of Independent Business, says this plan would cost jobs.
“The president’s plan to increase overtime pay demonstrates another antibusiness policy — coming on the heels of a proposal to increase the minimum wage, increase the minimum tipped wage, rising health care costs, as well as ever-growing, costly and unwieldy regulations.”
A bill recently filed by Rep. Todd Young (R-IN) could save franchisees hundreds of millions of dollars in healthcare costs by changing the definition of a full-time employee to include only those who work at least 40 hours per week—not 30 hours per week as defined under the Affordable Care Act. A companion bill has been filed in the Senate, sponsored by Sen. Susan Collins (R-ME) and Sen. Joe Donnelly (D-IN).