Some business lobbyists are starting to panic about the expiring payroll tax

at 01:56 PM ET, 12/20/2011

The business community has stayed relatively quiet on the payroll tax cut fight. Though businesses support the tax break, they’ve avoided getting caught up in a bloody political fight. “We’ve just got our heads buried in the sand on this one,” one industry lobbyist told Roll Call earlier this month.

But now that political brinksmanship has imperiled even a two-month extension of the tax cut, some industry players are trying to make themselves heard amid the din on Capitol Hill.

House Speaker John Boehner (R-Ohio) says his chamber will not extend a payroll tax break for two monthsl (SOURCE: AP )
The International Franchise Association warned that a failure to extend the payroll tax would “jeopardize the creation of 168,000 new jobs” for franchise small businesses in 2012, citing new estimates from research firm IHS Global Insight. Both employers and employees benefit from the payroll tax extension, but the franchise lobby said the industry was particularly concerned about the impact of a two percent tax hike on consumers.

“Franchise businesses are deeply reliant on consumer spending,” IFA president and chief executive Steve Caldeira said in a statement. “If Congress does not extend the payroll tax holiday, Americans will have less discretionary income, increasing an already high level of uncertainty amongst franchisees about sales and thereby hindering their ability to create new jobs.”

On Monday, the House rejected a bipartisan Senate bill to extend the payroll tax break for two months. House Republicans had revolted, arguing that voting for the extension would be “causing massive uncertainty to those struggling in the Obama economy” and demanding big policy extensions behind the payroll tax cut itself.

The franchise lobby would also prefer a year-long extension to a shorter one. But in the end, “any extension is better than no extension,” says IFA spokesman Matthew Haller.

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