NAIFA recently signed onto a letter supporting Congressman Lloyd Smucker's (R-PA, 11th District) newly introduced bill that would make the Section 199A deduction permanent. The bill had over 80 co-sponsors from both aisles and received unanimous support from the 25 Republicans on the Ways & Means Committee. The bill is similar to S.1706 introduced by Senator Steve Daines (R-MT) making the support for minimizing tax hikes bipartisan and bicameral.
Section 199A was created 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 199A pass-throughs, rates could be up to 16 percentage points higher than public companies.
The letter reads:
Section 199A is scheduled to sunset at the end of 2025, even as the businesses it supports continue to recover from the COVID-19 pandemic and the price hikes, labor shortages, and supply chain disruptions that followed. Making the Section 199A deduction permanent will help Main Street during this very difficult time, leading to higher economic growth and more employment.
The letter cites studies by various economists concluding that making the pass-through deduction permanent would result in significantly improved parity and lower rates for Main Street businesses. Making 199A permanent has other benefits other than just on the tax side. It also protects local communities through aiding Main Street businesses to remain open and offering employment, keeping prices lower, and allowing multi-generational businesses to stay family-owned.