Two events took place this week which demonstrate just how remarkably divergent the potential paths of tax policy are next year.

First, the Senate Finance Committee held a rare hearing Tuesday on the challenges faced by American manufacturers. Senator Steve Daines (R-MT) took the opportunity to highlight the importance of 199A to his manufacturers in Montana and how Congress needs to act to make it permanent.

As Daines noted:

The foundation of businesses in Montana are passthrough businesses. They make up 95 percent of all businesses and employ a majority of workers …

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When Congress finishes work on the tax package pending in the Senate, we expect the conversation to pivot rapidly to what we should do about all those expiring TCJA provisions at the end of 2025.

For S-Corp and its allies, our priority is to make the Section 199A deduction permanent and a big hurdle there is the lack of understanding of how pass-throughs are taxed and why the Section 199A small business deduction is critical to their success.

For example, of all the Republicans who served on Ways and Means during the TCJA debate, only five remain today. The staff …

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Chuck Marr, who heads up tax policy at the Center on Budget and Policy Priorities, took to Twitter recently to slam the Section 199A deduction. It’s a perfect example of the empty rhetoric deployed by critics of the provision:

There’s a lot to unpack here so we’ll start from the top. First, Marr is correct that pass-through businesses do not pay the corporate tax – they pay tax at individual rates.

These days, that’s a critical distinction, as the 37-percent top individual rate is well above the 21-percent corporate rate.  So are …

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The effort to make permanent the Section 199A Main Street business deduction just hit a significant milestone.

In just two weeks the Main Street Tax Certainty Act (H.R. 4721), introduced by Congressman Lloyd Smucker, has garnered the support of more than 100 House cosponsors. Among those backing the legislation are Democratic Representatives Henry Cuellar (TX) and Josh Gottheimer (NJ), and all 25 Republican members of the Ways & Means Committee.

Section 199A was enacted in 2017 to encourage job creation and new investment by private businesses.  It also helps private companies compete with large, publicly-traded corporations. Without the deduction, pass-throughs would …

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