S-Corp has had 24 hours to digest the Section 199A bill introduced by Senator Wyden yesterday, and the more we look, the less we like it.  Here are some additional thoughts:

Not an Expansion

Wyden’s office says the bill would raise $147 billion over ten years.  That is a large tax hike in anybody’s book, but you wouldn’t know that reading the media coverage, where the bill has largely been framed as an “expansion” of Section 199A, not a roll-back. For example, here’s Law360:

Sen. Ron Wyden introduced a bill Tuesday that would let owners of service businesses, like law firms and …

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Last month, over 100 trade associations voiced their strong opposition to changes to the Section 199A pass-through deduction. Their message was clear: now, more than ever, businesses across the country are relying on Section 199A to stay afloat.

Despite this broad opposition, Finance Committee Chair Ron Wyden today announced that he was pressing ahead with a bill to phase out the deduction for taxpayers with incomes over $400,000, while eliminating it altogether for those with incomes exceeding $500,000.

Section 199A offers business owners a 20-percent deduction on their qualified business income, but the benefit is phased out for “specified service” trade …

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