199A Response Letter to Proposed Deduction Legislation

Tuesday, June 22, 2021 - 12:00pm

The Honorable Ron Wyden Chairman

Committee on Finance United States Senate

219 Dirksen Senate Office Building Washington, DC 20510

 

The Honorable Mike Crapo Ranking Member Committee on Finance United States Senate

219 Dirksen Senate Office Building Washington, DC 20510

 

The Honorable Richard Neal Chairman

Committee on Ways and Means

United States House of Representatives 1102 Longworth House Office Building Washington, DC 20515

 

The Honorable Kevin Brady Ranking Member

Committee on Ways and Means

United States House of Representatives 1102 Longworth House Office Building Washington, DC 20515

 

 

June 22, 2021

 

Chairman and Ranking Members:

 

The undersigned trade associations represent millions of individually- and family-owned businesses operating in every sector of the American economy. We write to voice our strong opposition to any reductions or repeal of the 20-percent deduction for qualified business income under Section 199A, including phasing out the deduction above certain income thresholds.

 

Section 199A is an essential part of the Tax Code. Without it, individually- and family-owned Main Street businesses would pay significantly higher taxes, putting them at a competitive disadvantage and accelerating the economic consolidation taking place in our economy.

 

Individually- and family-owned businesses organized as pass-throughs are the backbone of the economy. They employ the majority of private-sector workers and comprise 95 percent of all businesses. Nearly 40 percent of these businesses closed their doors during the COVID pandemic, putting their owners and employees at risk. Section 199A provides critical tax relief to these businesses, enabling them to keep more of what they earn to reinvest in their employees and the communities they serve.

 

To ensure this focus on job creation and investment, Section 199A limits the deduction for larger pass- through businesses to those that have significant employment and investment levels. If a large pass- through business doesn’t create jobs and invest in its community, it doesn’t get the deduction. Section 199A’s laser focus on real businesses with real employees helped motivate the introduction of bipartisan legislation (H.R. 1381 and S. 480) to make the deduction permanent.

 

Proposals to limit or repeal the deduction would hurt Main Street businesses and result in fewer jobs, lower wages, and less economic growth in thousands of communities across the country. Such changes would amount to a direct tax hike on America’s Main Street employers, a key reason why the tax plan released by the White House in March left the deduction fully intact.

 

For these reasons, we support the Biden administration’s decision to leave the Section 199A deduction intact and we strongly oppose any attempt to cap or repeal it by Congress.

 

Sincerely,

 

AAHOA
Agricultural Retailers Association
AICC, The Independent Packaging Association Air Conditioning Contractors of America American Bakers Association
American Bankers Association
American Council of Engineering Companies American Farm Bureau Federation American Financial Services Association American Foundry Society
American Hotel & Lodging Association American Institute of Architects American Land Title Association American Mold Builders Association American Rental Association American Subcontractors Association Associated Builders and Contractors Associated Equipment Distributors
Associated General Contractors of America Associated Wire Rope Fabricators
Auto Care Association Brick Industry Association The CCIM Institute
Coalition of Franchisee Associations Construction Industry Round Table Energy Marketers of America Family Business Coalition
The Fertilizer Institute FEUSA
FMI - the Food Industry Association Foodservice Equipment Distributors Association Franchise Business Services
Global Cold Chain Alliance The Hardwood Federation
Heating, Air-conditioning, & Refrigeration Distributors International ICSC
Independent Bakers Association Independent Community Bankers of America Independent Electrical Contractors
Independent Insurance Agents and Brokers of America Industrial Fasteners Institute
Institute for Real Estate Management (IREM)
Institute of Scrap Recycling Industries, Inc. International Association of Plastics Distribution International Foodservice Distributors Association International Franchise Association
International Institute of Building Enclosure Consultants International Sign Association
International Warehouse Logistics Association Main Street Employers Coalition Manufactured Housing Institute
Material Handling Equipment Distributors Association Metals Service Center Institute
Mortgage Bankers Association NACS
NAHAD, The Association for Hose and Accessories Distribution NAMM, National Association of Music Merchants
National Apartment Association
National Association of Electrical Distributors National Association of Home Builders
National Association of Insurance and Financial Advisors National Association of Professional Employer Organizations National Association of Professional Insurance Agents National Association of REALTORS®
National Association of Wholesaler-Distributors National Automatic Merchandising Association National Automobile Dealers Association National Community Pharmacists Association National Electrical Contractors Association National Fastener Distributors Association
National Federation of Independent Business (NFIB) National Franchisee Association
National Grocers Association National Insulation Association National Multifamily Housing Council National Onion Association
National Ready Mixed Concrete Association National Restaurant Association
National Retail Federation
National Roofing Contractors Association National RV Dealers Assn (RVDA) National Small Business Association
National Stone, Sand & Gravel Association National Tooling and Machining Association NIADA
North American Die Casting Association Pacific-West Fastener Association Petroleum Equipment Institute (PEI) Precision Machined Products Association Precision Metalforming Association
 
PRINTING United Alliance The Real Estate Roundtable
REALTORS® Land Institute (RLI) Retail Bakers of America (RBA) S Corporation Association
SHDA, Security Hardware Distributors Association Small Business & Entrepreneurship Council Society of Collision Repair Specialists (SCRS) Society of Industrial and Office REALTORS® Southeastern Lumber Manufacturers Association Southwest Cable Communications Association Specialty Equipment Market Association
Spray Polyurethane Foam Alliance Subchapter S Bank Association Tile Roofing Industry Alliance
Tire Industry Association
U.S. Chamber of Commerce
WF&FSA, The Wholesale Florist and Florist Supplier Association Wine & Spirits Wholesalers of America
Wisconsin Grocers Association