The “framework” released by the White House this morning continues the assault on family-owned businesses.  Advertised as a less aggressive plan than the Administration’s Build Back Better (BBB) proposal, the bill would result in higher marginal rates on family-owned businesses than the BBB, and it would apply those rates to S corporations and other pass-through businesses making as little as $500,000 a year.

For pass-through businesses, the bill includes three substantial tax increases.  It would:

• Apply the 3.8 percent Net Investment Income Tax to all income earned by S corporations and partnerships. This tax was enacted as part …
  
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This morning, more than 90 trade associations representing millions of individually- and family-owned businesses sounded the alarm on the proposed changes to grantor trust and valuation rules in the Build Back Better Act (H.R. 5376) and called on lawmakers to reject these provisions.

The letter builds on a prior S-Corp letter sent last week, focusing on the adverse impact these proposed changes would have on family businesses nationwide.  Regarding Grantor trusts, the letter reads:

The changes related to the taxation of grantor trusts would eliminate the usefulness of the grantor trust for normal and legitimate business (non-tax) purposes, such as …

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Like a vampire, the Wyden “mark-to-market” (or M2M) proposal rose from the dead over the weekend in what appeared to be a Hail Mary effort to replace large portions of the House tax hike plan at the last minute. Those parts were objected to by Senator Sinema, leaving negotiators with a large hole both in their revenue and their rhetoric.  Enter M2M.  Then Senator Manchin and Chairman Neal spoke up in opposition to the idea.  Exit M2M.

Before we get to the outlook, it’s important to focus first on just how bad an idea M2M is.  As we …

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