A new report from the Congressional Research Service (CRS) puts fresh numbers behind a point we’ve made for a decade: Section 199A is essential to keeping pass-through businesses competitive with their C corporation counterparts.

The report examines the effects of increasing the Section 199A deduction from its current 20 percent to 25 percent, which was floated as part of last year’s tax bill debate. CRS modeled that proposal to see how it would affect marginal effective tax rates on new business investment. Their chart shows the results:

As noted, Marginal …

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Tax writers need to put a trigger warning on future 199A discussions, particularly for DC tax experts.  It appears they are highly sensitive to the topic.

For example, in response to Ways and Means Chairman Jason Smith’s recent support for increasing the 199A deduction to 25 percent, AEI’s Kyle Pomerleau posted some thoughts that, on the surface, appear to make sense:

Pass-through businesses are already tax advantaged. Although C corporations face a 21 percent corporate tax rate, their profits are also subject to the individual income tax when distributed to shareholders. After considering various tax provisions that reduce the …

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A broad coalition of Main Street organizations is making the case for the Working Families Tax Cut Act and what it means for the businesses that drive the American economy.

Earlier today, around 100 trade associations signed onto a letter thanking lawmakers for enacting the historic tax relief last year. The letter was organized by our Main Street Employers Coalition and highlights the bill’s real, lasting benefits to the pass-through businesses that employ the majority of private sector workers:

Making permanent lower marginal rates and the Section 199A small business deduction were key to the success of the bill. Those provisions …

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