Thousands of small, family-run retailers like ours face enough of a challenge with Washington’s self-inflicted trade war, which is is raising costs and generating uncertainty. At the very least, Congress could help ease the burden by fixing an apparently small error in the Tax Cuts and Jobs Act of 2017 that is having a very large impact on our ability to grow and invest, create jobs, and lift up our communities.
The details are complex, but the error means that investments in stores, restaurants, and other facilities can now only be depreciated for tax purposes over 39 years, instead of the immediate write-off Congress intended. This error, which Congress alone can and must fix, is hindering millions of dollars of critical investment for small, family-run businesses like mine all across the country. What’s become known as the “retail glitch” is hurting not only retailers and restaurants, but hotels, office building owners, construction firms, building suppliers, and even firefighters.
I see the negative effects firsthand. For more than 60 years, our family has owned and operated American Sale stores in the Chicago area, serving hundreds of thousands of customers and providing hundreds of jobs in our nine locations. As a home recreation retailer, we pride ourselves on offering our customers great products at competitive prices in an appealing and relevant store environment. But in order to do so, our fleet of stores and massive warehouse require costly maintenance and upgrades.
Unfortunately, many of our remodeling and improvement projects are now on hold, all thanks to a failure by Congress to fix this unintended error. Our business, employees, and customers aren’t the only ones who are affected. When the tax code makes it impractical to invest potentially millions of dollars to grow and improve our company, the local economy and job market suffers.
Renovations and store improvements may not sound like much, but our stores are enormous. They average 35,000 square feet. Some are as big as 50,000, requiring large capital expenditures in significant improvement projects.
Because of this size, upgrading and enhancing our stores are critical investments that create jobs, whether it’s remodeling with a new layout, putting in new floors and lights, or repairing parking lots from a harsh winter. These projects require workers and materials that give lift to other small businesses in the area and grow our local economy.
Misguided tariff policies aside, lawmakers have actually been responsive to the needs of small retail businesses in recent years. Efforts to reduce rates and simplify the tax code have helped. The intent of this tax provision was supposed to be helpful as well, making it more desirable to invest in our business and the local economy.
However, due to this mistake, it’s cost-prohibitive to do so. Every day this error persists, communities like ours miss out on significant investment, related economic activity, and other potential benefits. When considering the costly impact of tariffs, which are offsetting the benefits of tax reform itself, our business is now taking a double hit.
The good news is that a bill already exists to fix these technical errors so that the intent can finally match up with the law itself. We need our lawmakers to cosponsor the bipartisan Restoring Investment in Improvements Act in order to support our workers, businesses, and communities. We have waited for over a year for Congress to fix this error. Doing so would unleash investments that have been put on hold while adding no cost to the federal government.
American Sale is a family-owned, family-run business that has grown, thrived, and benefited the local economy for six decades. We want to keep doing it for the next six decades — but we need Congress to make this common-sense fix. When the tax law works like it should, we can make the investments we need to better serve our customers, create jobs, and empower our community.
Robert Jones is president of American Sale, a Chicago-based pool and patio retailer.
