General:  Neither the House nor the Senate bills live up to the promise of the 25-percent pass-through rate proposed in the Framework.  The Senate bill doesn’t even have a pass-through rate.  Pass-through businesses employ the majority of workers and earn the majority of business income.  They represent approximately one-third of the entire American economy.  Yet neither the House nor the Senate bills devote anything close to these percentages for tax relief towards the pass-through sector.  The Senate bill in particular comes up short, even with the improvements made on the Senate floor.  To fix this, conferees should devote a proportional …

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Yesterday 42 Main Street trade groups, including the National Beer Wholesalers Association, the Independent Community Bankers of America, the Associated Builders and Contractors, and the S Corporation Association sent a letter to Chairman Hatch calling for tax reform that treats Main Street businesses fairly.  As the letter states:

While the bill’s 17.4 percent deduction is a welcome effort to lower rates on all pass-through businesses, the provision is both temporary and too low.  The deduction’s 50-percent payroll limitation would leave behind pass-through businesses that do not add direct payroll at a one-to-one ratio as they grow while blocking …

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The Tax Foundation is out with a new write-up called, “Are Pass-Through Businesses Treated Fairly Under the Senate Version of the Tax Cuts and Jobs Act?” that has a chart showing the top rate applying to S corporations in the Senate bill is 34.94 percent while the C corporation rate is 39.04 percent.  Is that correct?  No.  Not even close.

Here are the concerns we have with the Tax Foundation Write-Up:

Deferral:  The Tax Foundation analysis assumes that the full second layer of corporate tax is paid, and paid immediately.  This is simply not true.  First, there are some …

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