NAIFA, in conjunction with a coalition of pass-through business employers, has weighed in with Congressional leadership on the importance of extending expiring tax rules important to pass-through (S corps, partnership, sole proprietorship) businesses.

On February 24, the Main Street Employers Coalition sent a letter to Speaker of the House Rep. Mike Johnson (R-LA) and Democratic Leader Rep. Hakeem Jeffries (D-NY) urging Congress “to act quickly to prevent a massive tax hike on Main Street businesses.”

The letter says, “Absent action, millions of Main Street businesses organized as S corporations, partnerships, and sole proprietorships will see their taxes go up sharply next year. Taxes on these pass-through businesses will go up when they earn profits, when they invest, and when they pass their businesses on to the next generation.

“Pass-through businesses are the backbone of the American economy. They account for 95 percent of all businesses and employ 63 percent of all private sector workers. They also form the economic foundation for thousands of communities nationwide. Without them, those communities would face a future of lower growth, fewer jobs, and more boarded-up buildings. Provisions to make permanent the Section 199A deduction, maintain rates on individuals and pass-through businesses, provide estate tax relief, and increase deductions for business investment in equipment and R&D are critical to the continued success of our members.”

Prospects: Extension of these expiring (or in some cases already-expired) tax rules is at the heart of the reconciliation legislation debate that has now gotten started. The outcome is uncertain, but it is worth noting that Democrats as well as Republicans support extending current tax rules at least for taxpayers earning $400,000/year or less. It may happen that all the expiring tax rules are extended (perhaps modified, as NAIFA wants for expansion of eligibility for the Section 199A deduction for qualifying noncorporate business income), but revenue as well as policy concerns, along with a bitterly-divided partisan Congress, make that outcome far from certain.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org;