The American Hotel & Lodging Association (AHLA) is spearheading an aggressive push for the passage of the Tax Relief for American Families and Workers Act (H.R. 7024). On this Tax Day, the organization is mobilizing its over 30,000 members to contact their Senators in support of this crucial legislation.
The proposed bill includes several key provisions that could provide substantial financial relief to hotels and their employees during a period of significant economic uncertainty. Factors like persistent inflation, labor shortages, and increased federal regulations have created formidable headwinds for the industry.
"America's hotels desperately need assistance navigating these economic challenges," stated AHLA Interim President & CEO Kevin Carey. "On this Tax Day, we implore Senators to listen to our industry's concerns and rapidly pass this tax relief package."
A recent study by Cornell University outlined how impactful the bill could be, with potential tax savings ranging from tens of thousands to millions of dollars per hotel property. Here are the key components:
- Extension of 100% bonus depreciation through 2025 - This allows hotels to deduct the full cost of qualified improvements and investments upfront rather than depreciating them over many years. It incentivizes reinvestment into aging properties and new hiring.
- Four-year retroactive extension of EBITDA standard for business interest deductions - Maintains a more favorable metric for determining how much business interest can be deducted, improving liquidity.
- Enhancement of the Child Tax Credit - Provides further financial support for hotel employees with children.
While the bill passed the House with bipartisan support in January, it now faces an uncertain future in the Senate. Hoteliers argue that without this relief, the industry's recovery could stall, leading to more property closures, layoffs, and economic strain in communities across the country.
Hotel Industry Divisions Emerge Over Tax Relief Package
While the AHLA has put forth a united front in advocating for the Tax Relief Act, cracks are beginning to show within the hotel industry itself. Several prominent owners of independent hotels and representatives of franchisee associations have voiced concerns that the proposed tax provisions disproportionately favor the major chains.
"The bonus depreciation and interest deduction rules are great if you have ambitious remodeling plans and are highly leveraged, but that's not the reality for many of us smaller operators," stated Jillian Torres, President of the Hispanic Hotel Owners Association. "We need more direct relief on things like payroll taxes to keep our workforce intact."
Large public hotel companies have been able to raise significant capital and are better positioned to take advantage of accelerated depreciation schedules. Conversely, many smaller independent hotels have older properties and prioritize smaller renovations over major overhauls.
"The AHLA pushes hard for these capital expenditure incentives because the big brands want to keep mandating property improvements from their franchisees," claimed Austin McDonald, CEO of RockCity Hotels. "But we're in a cash crunch just trying to retain our staff right now."
Despite the internal rifts, both AHLA leadership and the dissenters agree that failing to pass any relief package could be catastrophic. They implore lawmakers to consider amendments to better support the industry's diversity of operators and ownership structures.
Tax Relief Fight Inflames Broader Partisan Battles Over Deficit Spending
Beyond the lobbying efforts of the hotel industry, the Tax Relief Act has become a proxy battle over fundamental ideological differences on fiscal policy between Republicans and Democrats in Congress.
Republicans have rallied behind the legislation as a way to spur business investment, create jobs, and incentivize economic growth through tax cuts - tenets of traditional supply-side economics. They argue that the short-term increase in deficit spending will pay long-term dividends.
"The last thing we need right now is to hammer job creators with more taxes as they're clawing their way out of the pandemic downturn," argued Sen. Mike Braun (R-IN). "This relief gives businesses the fuel to spark an economic boom that will ultimately increase federal revenues."
Democrats have pushed back vehemently, characterizing the bill as disproportionately benefiting wealthy corporations and landlords rather than working families.
They contend deficit spending amid high inflation is fiscally irresponsible and potentially counterproductive.
"We're in a precarious period of rising prices, interest rates, and cost-of-living - now is not the time to blow an extra hole in the deficit to Line the pockets of hotel tycoons," stated Sen. Ron Wyden (D-OR). "We should be investing in policies that put money directly into the hands of consumers and workers."
With the Senate evenly split 50-50, the legislation's fate could come down to a handful of moderate votes in either direction. The acrimonious debate has raised the stakes beyond just the hotel industry's fortunes to a referendum on broader economic philosophies and priorities in Washington.
In Conclusion…
Critics contend that extending these tax provisions primarily benefits large corporations and comes at a cost to the federal budget deficit.
They argue that more targeted support for small businesses and individuals may be a more prudent approach during inflationary times.
Regardless of which side prevails, it's clear the hotel industry sees this legislation as vital for withstanding the current turbulent economic conditions. As Tax Day rallies occur, all eyes will be on the Senate to determine the fate of this contentious tax relief package.
Source: AHLA