Trade Groups to Lawmakers: Don’t Raise Taxes on Small, Family Owned Businesses
July 13, 2022
As households and businesses face a possible recession, decades-high inflation levels and other economic challenges, a broad coalition of trade groups—including ABA—representing a wide range of industries urged lawmakers to reject policy proposals that would raise taxes on small, individually and family-owned businesses.
Lawmakers are currently considering two possible tax increases that would fall on these businesses, which include banks operating as Subchapter S corporations—approximately one-third of all banks in the U.S. The first proposal would expand the 3.8% net investment income tax to individuals and families who actively participate in their business. The second would limit the ability of these businesses to fully deduct their losses during an economic downturn.
“Combined, these would increase revenues by more than $400 billion over ten years, shouldered entirely on the backs of small, individually, and family-owned businesses,” the groups wrote. “Raising taxes on small and family-owned businesses with the economy on the brink of a recession, a situation which is compounded by the other post-pandemic challenges they face, harms not only the businesses but the families and communities who rely on them.
The groups warned that expanding the NIIT in particular “would raise taxes on small and family-owned businesses when they are profitable, while extending and expanding the ‘excess loss limitation’ rules would hurt them in the next downturn,” and urged lawmakers to “reject these or any tax hikes on America’s small and family-owned businesses in any legislation considered this year.” Read the letter.