NSAC Support of Section 199 A Permanence
NSAC joins the Main Street Employers Coalition and more than 230 trade associations supporting legislation to make the Section 199A deduction permanent. The Main Street Tax Certainty Act is set to be reintroduced by Senator Steve Daines (R-MT) and Representative Lloyd Smucker (R-PA).
The deduction was enacted in 2017 to encourage job creation and new investment by private businesses. It also helps private companies compete with public corporations. Without the deduction, pass-throughs would face rates up to 16 percentage points higher than their publicly-traded competitors. The challenge is Section 199A will expire at the end of this year absent congressional action.
The letter makes the case for permanence and was signed by more than two hundred and thirty trade associations, a strong show of support that highlights just how critical the provision is:
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 and social foundation for thousands of communities nationwide. Absent their efforts, those communities would face a future of lower growth, fewer jobs, and more boarded up buildings.Despite its importance, the Section 199A deduction is scheduled to sunset at the end of 2025, even as the businesses it supports continue to struggle with rising prices, labor shortages, and supply chain disruptions. A recent EY study found the loss of Section 199A would put 2.6 million jobs at risk.
Making the Section 199A deduction permanent will help Main Street compete with large public corporations, lead to higher economic growth and more employment, and help prevent a significant tax hike on the very businesses we rely on to drive our economy. Numerous studies by economists Barro and Furman, the American Action Forum, DeBacker and Kasher, EY and others found Section 199A permanence would result in improved parity for Main Street businesses and higher levels of economic growth.