Ken Kies is a former head of Congress’ Joint Committee on Taxation and one of Washington’s most respected tax experts. Today he has a succinct and highly persuasive defense of the Section 199A deduction that’s worth the attention of tax writers.

In a letter published in Tax Notes, Kies makes clear that C corporations are already tax advantaged when compared to pass-through businesses, and that paring back 199A would only make the imbalance worse:

Current law should be retained in its entirety. Taking into account all the proposed changes in the pending legislation, passthrough businesses would wind up being taxed more …

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The House tax package would hit private companies twice as hard as public C corporations.  It would impose marginal rates of 46.4 percent or more on private companies, while taxing public corporations as little as 26.5 percent.  No business structure can survive such an imbalance, so the net effect would be to encourage further economic consolidation away from Main Street and towards Wall Street.

Why should policy makers care?  Because private companies are where the jobs are.

A new study from EY demonstrates that private companies supply the vast majority of jobs nationally – 77 percent of them.  Public companies supply …

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S Corporation Association advisor and Board member Tom Nichols of Meissner Tierney Fisher and Nichols has published a solid defense of 199A in TaxNotes this week.

As we’ve noted previously, the House tax package would knee-cap private companies with rates nearly twice those paid by public C corporations – 46.4 percent versus 26.5 percent.  No business structure can survive such an imbalance, so the net effect would be to encourage further consolidation into the few thousand companies traded on the public exchanges.  That’s bad for millions of Main Street businesses and bad for the workers and communities that depend on …

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The House Ways and Means Committee on Monday released legislation aimed at paying for the Democrats’ $3.5 trillion spending package. Committee members are scheduled to begin marking up the package today and expect to finish on Wednesday. A summary document suggests the tax hikes would amount to some $2 trillion in new revenue, with an additional $200 billion in savings resulting from increased IRS funding.

Provisions Affecting Pass-Throughs

For private businesses, the Chairman’s mark is nothing short of a declaration of war.  There’s a reason more than 120 groups wrote the Committee in opposition to the package last week.  …

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