Statement on Proposal to Limit Section 199A Deduction

Today, the Main Street Employers Coalition issued the following statement in response to the Wyden proposal to limit the 20 percent Main Street business deduction:

“Individually- and family-owned businesses took a big hit during the COVID crisis. The pandemic has taxed them enough — taxing them again while so many are still struggling to recover goes too far. That’s why we oppose Senator Ron Wyden’s proposal to raise taxes on these businesses by limiting the 20% Main Street deduction,” stated Chris Smith, Main Street Employers Coalition Executive Director. “Main Street’s position is clear: Don’t touch 199A.”

“Americans understand that when taxes on businesses go up, they will pay with higher prices, lower wages and fewer jobs. Instead of hiking taxes, we should do everything we can to help businesses get back on their feet, put Americans back to work, and to keep the economy moving in the right direction.”

“Keeping 199A intact and making it permanent, would do just that.”

Main Street Says: Don’t Touch 20% Deduction

The Main Street Employers coalition joined with more than 100 business groups to send a letter to Congress strongly opposing any attempt to cap or repeal the Section 199A 20% Qualified Business Income deduction.

Section 199A is an essential part of the Tax Code that helps individually- and family-owned businesses remain competitive, and has proven critical in enabling those businesses hardest hit during the COVID pandemic to survive.

With Section 199A scheduled to sunset at the end of 2025, and with businesses still struggling due to the effects of the pandemic, Congress should be working to make this critical provision permanent.

We support the Biden administration’s decision to leave the Section 199A deduction intact and strongly oppose any attempt to cap or repeal it by Congress.  The full text of the letter follows:


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.

Main Street Employers Coalition Featured by CNBC

Today the Main Street Employers coalition joined with more than two dozen groups representing U.S. businesses and employers to unveil a new effort to fight against the Biden plan to raise taxes on job creators. The coalition of 28 industry groups is organized under the name “America’s Job Creators for a Strong Recovery” to make the case that hiking taxes on individually and family owned businesses and corporations will hamper the U.S. economy in the wake of the coronavirus pandemic. Chris Smith, Executive Director of the Main Street Employers Coalition, was quoted in a May 25 piece published by CNBC:

“The pandemic has taxed individually and family owned businesses enough — taxing them again while they are still struggling to recover just goes too far.

“These tax hikes would put the path of the recovery at such risk, so we need to make sure the voice of Main Street is heard loud and clear with the people and places that matter most”

The full article can be accessed below:



Main Street Employers Coalition Statement on Biden Tax Proposal

— Click here to download a copy of the full statement —


Chris Smith, Executive Director of the Main Street Employers coalition of national trade groups, issued the following statement in response to the Biden administration’s American Families Plan:

“Main Street businesses took a big hit during the COVID crisis, and the latest Biden plan is a triple threat to individually- and family-owned businesses still struggling to recover.  It would raise taxes on what they earn, raise taxes when they are sold, and raise taxes when they are passed from one generation to the next.  That means less money to rehire, invest and grow on a daily basis and then, every generation, they would be forced to repurchase more than half the business from the IRS.  The combined policies represent one of the most anti-Main Street plans ever proposed.” 

“Taxing capital gains at death will especially hurt family-owned businesses.  The proposal would impose a new, 43.4 percent tax on the appreciated value of a business when the owner dies, and then tax those same assets again with the 40 percent estate tax.  The combined hit would force many families to sell the farm or business just to pay taxes, and make it nearly impossible to keep family-owned farms and businesses in the family.”

For more information on the Main Street Employers coalition, please visit



Estimated SALT Parity Relief by State

Of the 41 states that tax pass-through businesses at the owner level, more than half have either adopted our SALT Parity reform or are actively considering it.

This is a big deal to the S corporations and partnerships in those states. The disparate SALT treatment they experience puts them at a significant disadvantage compared to their C corporation competitors and compared to entities operating in states with no income tax, like Texas and Florida.

Billions are at stake. Using IRS data and the fiscal notes published by other state revenue agencies, we roughly estimate that more than three million S corporations and partnerships would benefit from $5.9 billion in annual relief. Click the image below for a full table outlining our estimates:


Recap: Main Street Tax Day Summit

Earlier today, the Main Street Employers coalition participated in the Main Street Tax Day Summit hosted by the S-CORP Association and NFIB. Attendees heard Sen. Steve Daines (R-MT), small business owners from across the country, and tax policy experts discuss the threat that the ongoing tax debate poses to America’s Main Street businesses.

Sen. Daines kicked things off by commenting on the current legislative outlook, and emphasized the importance of preserving key provisions from the 2017 tax bill, notably the Section 199A deduction, the risk of proposed business tax increases so close on the heels of the pandemic, and the importance of the small business community raising its voices now with policymakers.

Attendees then heard from a panel featuring four small business owners from across the country. The panelists reflected on how the changes in the 2017 tax law have impacted their business operations, often enabling them to make investments in their employees and company that they otherwise would not have. They also warned of the negative consequences of raising rates and eliminating the 199A pass-through deduction. Raising their taxes now “could be the final nail in the coffin for businesses hanging on by a thread”, make it harder for them to raise wages and compete.

The second panel was hosted by Executive Director of the Main Street Employers coalition Chris Smith. Panelist George Callas, a Managing Director at Steptoe, outlined the various policy risks facing Main Street business owners as a result of recent proposals. Closing out the event was David Winston, who provided his analysis of recent trends in voter data, including public perception on tax fairness and reticence to pay higher taxes.

If you weren’t able to join us live, click here for a recording of the Main Street Tax Day Summit

Main Street Business Summit – Join Us April 15th

NFIB & S-Corp Present:
A Main Street
Tax Day Summit
With Special Guest
Senator Steve Daines
Thursday, April 15th
10am – Noon (EDT)
(No signup necessary – just use the link above to access the virtual event on April 15)
Join us April 15th for our
Main Street Tax Day Summit
Hear from business owners and tax experts as they outline the threat the coming tax debate poses to
America’s Main Street Businesses  
Keynote Speaker
Senator Steve Daines (R-MT)


Panel 1: Business Owners
The panel will feature four small business owners from across the country sharing their views on how the changes from the 2017 tax law have impacted their business operations, and how newly proposed changes to tax policy could affect their plans, their employees, and their communities.


Panel 2: The Tax Policy Outlook
Concerned about where small business tax policy is headed and how different proposals resonate with voters? Our panel of experts will review voter perceptions and highlight what business owners should worry about in the coming tax hike debate. Will Congress focus on taxing big corporations only, or extend tax increases to individually and family owned small businesses? George Callas with Steptoe and David Winston with the Winston Group will provide the answers.

PMSE Statement in Support of 199A Permanence Bill

Today the Parity for Main Street Employers Coalition of national groups representing millions of individually and family owned businesses announced its strong support for the Main Street Tax Certainty Act of 2021, which would make permanent the Section 199A 20-percent deduction for qualified business income.

“We thank Representatives Smith and Cuellar, and Senators Daines, Cassidy, Scott (SC), and Portman for their bipartisan leadership on this important legislation to ensure permanent tax parity for individually and family owned businesses,” stated PMSE Executive Director Chris Smith.  “Making Section 199A permanent would provide much-needed certainty so Main Street employers can move forward with confidence after being so hard hit by COVID-19 closures.  The sooner Congress acts to make Section 199A permanent, the sooner Main Street communities will recover.

The section 199A deduction is an essential feature of the tax code to ensure tax parity between millions of individually and family owned businesses and C corporations. These employers–organized as S corporations, partnerships and sole proprietorships–are the backbone of the American economy, employing the majority of private-sector workers and representing 95 percent of all businesses.  Despite the economic importance of the pass-through sector for jobs and growth, Section 199A is scheduled to sunset at the end of 2025, resulting in a draconian tax increase on the country’s most significant source of employment.



PMSE Statement (PDF)

New York Joins SALT Parity Effort

The good news on SALT Parity keeps rolling in.  Just days after California’s Governor signaled his support, New York Governor Andrew Cuomo followed suit and included our pass-through SALT Parity language in his 2022 fiscal year budget proposal.

The briefing book accompanying Governor Cuomo’s budget proposal makes clear the state adopted our recommendations in their latest proposal:

The Budget includes a new voluntary Pass-Through Entity Tax designed to mitigate the impact of the cap on state and local tax (SALT) deductions enacted in the 2017 Tax Cuts and Jobs Act. Pass-through entities can deduct this tax at the Federal level, thereby allowing partners of partnerships and shareholders of S corporations to receive the benefit of a full deduction for SALT paid before income is passed-through to them. A credit will be allowed against regular State income tax to offset the new Entity tax. This proposal aligns with similar efforts in Connecticut and enables individuals affected by the SALT cap to use IRS-allowed business deductibility to mitigate its impacts.

So, New York joins more than a dozen states actively considering our SALT Parity reform this year.  With the uncertain prospects of federal action, the recent IRS blessing clarifying their position, and the effects of COVID continuing to negatively affect millions of businesses, this is the perfect time for states to take up this reform and help their Main Street businesses.

Main Street Employers and SALT – Issue Brief

Given all the activity on the SALT Parity front, we decided to put together some materials outlining the issue, why it’s important, and the status of our efforts.

The presentation can be accessed by clicking the preview image below:

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