Tax Policy - The S Corporation Association

The Experts are Wrong (Part V)

Several months ago, we asked Penn Wharton to help us score some ideas on tax reform. They politely declined. Too busy analyzing the 199A deduction, apparently. Their new paper on the deduction makes two points — the first is wrong and the second, while interesting, is not particularly helpful.

Their first point is that “Section 199A provides a 20 percent reduction in the tax rate for qualified business income relative to ordinary income tax rates.” That’s wrong. The Section 199A deduction reduces a pass-through’s Qualified Business Income, not the tax rate. The deduction makes no claims on tax rates.

This mischaracterization …

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admin2025-01-30T17:32:11+00:00January 30, 2025|

The Winds of Change (and Taxes)

The Senate confirmed Scott Bessent to run the Treasury Department yesterday, which means there’s a new sheriff in town. That’s good news for the millions of Main Street businesses targeted by the Biden Administration for higher taxes and more onerous regulations.

But Main Street didn’t have to wait for Bessent’s confirmation to see how the landscape has changed under Trump. We’ve already seen material differences that promise relief now and in the future.

Example one is their approach to Europe’s Pillar 2 minimum tax campaign. Pillar 2 is a poorly disguised effort by the EU to target large US multinationals …

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admin2025-01-28T17:22:04+00:00January 28, 2025|

Main Street Tax Certainty in the House (and Senate)

Earlier today Senator Steve Daines and Congressman Lloyd Smucker reintroduced their Main Street Tax Certainty Act, legislation to make permanent the Section 199A deduction. The bills mirror S. 1706 and H.R. 4706 from last Congress, meaning the campaign to protect Main Street from looming tax hikes is once again a bicameral and bipartisan effort.

The legislation introduced today builds on our prior success in a big way. Whereas the previous House bill garnered support from 91 original cosponsors – a significant feat in and of itself – Congressman Smucker’s bill was released today with the backing of 151 original cosponsors. It’s …

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admin2025-01-23T22:47:21+00:00January 23, 2025|

Main Street Rallies Around 199A Permanence

More than 230 trade associations came out in support today of legislation to make permanent the Section 199A deduction. Appropriately named the Main Street Tax Certainty Act, the bill is set to be reintroduced tomorrow by Senator Steve Daines (R-MT) and Representative Lloyd Smucker (R-PA), two of the Main Street business community’s staunchest allies.

The deduction was enacted in 2017 to encourage job creation and new investment by private businesses. It also helps private companies compete with public corporations. Without the deduction, pass-throughs would face rates up to 16 percentage points higher than their publicly-traded competitors. The challenge is …

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admin2025-01-22T16:48:04+00:00January 22, 2025|

The C SALT Loophole

Last month, the Bipartisan Policy Center put forward some suggestions on how to address the pending sunset of the State and Local Tax (SALT) cap, including rolling back the pass-through “SALT Parity” laws we helped enact in 36 states. A couple of thoughts.

Pass-Through Parity

First, the SALT cap played a big role in our efforts to ensure pass-through businesses were treated fairly under the TCJA. The SALT cap raises huge amounts of revenue ($100 billion-plus per year) and about 20-30 percent of that is paid on pass-through income. For comparison, that’s about half the total revenue impact of the …

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admin2025-01-16T19:22:08+00:00January 16, 2025|