A recent Twitter thread caught our eye. S-Corp typically avoids these Twitter feuds, but this is an important topic that deserves some clarity. Here’s the thread in question:

So Pomerleau thinks 199A is unnecessary while S-Corp and our Main Street Employers Coalition have long maintained that 199A is necessary for rate parity. Who is right?

Effective Statutory Tax Rates

Looking at Pomerleau’s paper, he uses three measures to examine the parity question – Effective Statutory Rates, Marginal Effective Tax Rates, and Average Marginal Effective Tax Rates.  For the first, here’s his table:

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Tax Notes ran a letter to the editor this week penned by S-Corp President Brian Reardon. It responds to a recent critique of the Section 199A deduction and serves as a useful “cheat sheet” in rebutting the various claims we’ve seen over the years.

The first is that extending 199A will add to the deficit. As the piece points out:

The deduction was packaged with numerous tax hikes — the state and local tax cap, the excess loss limitation, the interest deduction cap, and others — that target upper-income business owners. Many of these pay-fors stay in the tax code …

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More than 20 business owners and members of the Main Street Employers Coalition convened in Sarasota, Florida yesterday for a roundtable discussion with Congressman Greg Steube. The key topic – the Section 199A deduction – was one that’s near and dear to the hearts of tens of millions of Main Street businesses nationwide, yet is scheduled to sunset at the end of next year.

The businesses at the event were a microcosm of the broader Main Street community nationwide and represented a wide array of sizes and industries. On hand were …

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Back in 2021, we posted all the studies and other information we’d compiled demonstrating the outsized role family businesses and other pass-through employers play in the American economy. These businesses earn the majority of business income and they employ more than six in ten private sector workers. Any conversation about the economy and American competitiveness needs to start with them.  

That post was part of the fight over the Build Back Better Act, legislation that would have literally taxed many family businesses out of existence. We won that fight, but now face yet another existential …

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