Latest from the Blog
Main Street Supports New Taxpayer Protection Legislation
The Main Street Employers Coalition joined with over 40 national organizations in support of H.R. 23, the Family and Small Business Taxpayer Protection Act. The bill would rescind billions in questionable funding enacted in 2022 by the previous congress which expanded the Internal Revenue Service’s (IRS) audit enforcement activities, while doing little to improve woefully inadequate taxpayer service. To access a copy of the letter, please click here. Read More
S-CORP Podcast on Heightened Interest in the Employee Retention Credit
What’s the real story behind all these firms offering a big payday through the Employee Retention Credit? The S Corporation Association’s latest podcast, featuring veteran tax practitioner Lynn Mucenski-Keck, has all the answers. The episode is available at the link below, or through your favorite podcast app: Talking Taxes in a Truck Episode 24: “I’m Worried About Everything” Read More
ENABLERS Act Opposed by 75+ Trade Associations
Today, the Main Street Employers Coalition joined with dozens of its trade association allies to oppose the ENABLERS Act, legislation that would put some 30 million law-abiding small businesses in the crosshairs of federal law enforcement. At its core, the ENABLERS Act relies on criminals, including the lawyers and other financial professionals who assist them, to voluntarily provide an accurate picture of their activities to Treasury. As the letter... Read More
Main Street Asks Congress to Reject the Inflation Reduction Act
Today, the Main Street Employers Coalition joined with more than 70 trade associations in opposing the Inflation Reduction Act. A letter sent to lawmakers highlighted the various tax provisions that are harmful to the small and family-owned business community, and points out that now is simply not the time to be raising taxes on these employers. The letter, which can be accessed by clicking here, reads: The undersigned organizations... Read More
MSEC: The Inflation Reduction Act Fails to Address the Challenges Facing Main Street
“The Main Street Employers Coalition – comprised of national trade groups representing individually and family-owned businesses employing millions of Americans in every state – believes the “Inflation Reduction Act” would fail to address the major challenges confronting Main Street today: high inflation, a slow economy, and a tight labor market. “Recent NFIB member surveys make clear that inflation is the number one concern for Main Street businesses right now.... Read More
Main Street Unites Against Senate Democrats’ Tax Rate Hike
The Main Street Employers Coalition joined with more than 190 business organizations, representing millions of Main Street businesses and tens of millions of American workers, to oppose Senate Democrats effort to raise tax rates on individually and family-owned businesses. The latest proposal includes a 3.8 percent tax rate hike on the active income of 1 million businesses struggling with high inflation and looming recession fears. The letter makes it... Read More
Statement from the MSEC Opposing Inflationary Tax Hikes on Individually & Family Owned Businesses
Main Street Opposes Inflationary Tax Hikes on Individually & Family-Owned Businesses “It’s the kind of thing you’d do to start a recession, not prevent one.” WASHINGTON, D.C. (July 11, 2022) – The Main Street Employers Coalition—comprised of national trade groups representing individually and family-owned businesses employing millions of Americans in every state and district—released the following statement on a Democratic plan to raise tax rates on individually and family-owned businesses: “We... Read More
Inflation, Taxes, and Family Businesses – What do Voters Really Think?
Our allies at the S Corporation Association recently held a webinar to highlight the results of its new national survey. David Winston, whose research and polling firm conducted the survey, was on hand to break down the results and explain how voters feel about inflation, the Build Back Better Act, the current state of the economy, and their potential impact on November’s elections. As David made clear, the polling... Read More
Amid Record Inflation, Business Community Calls on Congress to End BBB Talks
With inflation rising at a 40-year high, over 90 business groups called on Congress today to end efforts to pass Build Back Better and instead shift to the pressing issues confronting American families & businesses – rising prices, labor shortages & supply chain disruptions.
A copy of that letter can be downloaded by clicking here, and is below:
The undersigned business trade groups call on Congress and the Administration to end efforts to pass the multi-trillion-dollar tax increase included in the Build Back Better (BBB) bill and focus instead on the challenges confronting American families and businesses today – rising prices, labor shortages, and ongoing supply chain constraints.
Today’s Consumer Price Index report showing inflation rising at the fastest rate in forty years has our members understandably alarmed. Rapidly rising prices are a serious challenge to businesses of all sizes as they make purchasing inventory, supplies, and inputs such as heat and electricity more expensive. In many cases, our members are unable to pass these higher costs on to their customers. Some customers are unable to pay higher prices, while others are locked into long-term contracts that preclude price changes.
These challenges are amplified by today’s constrained labor markets. NFIB’s member surveys rank the ongoing worker shortage as the number one challenge employers face. When businesses do find suitable workers, they often need to offer them higher wages to entice them to come to work. In ordinary times, this would be good for the workers, but as we have seen in recent months, inflation eats away at these nominal pay increases and real wages are actually down this year.
The Administration argues that the Build Back Better bill will help to reduce prices, but those arguments are simply not credible. Our members believe the primary causes of the reemergence of inflation are the Federal Reserve’s continued easy money policies, massive amounts of deficit spending by Congress, and continued supply constraints, some tied to the Administration’s economic and Covid policies.
Raising taxes on America’s family businesses in this environment moves us in the wrong direction. Recent estimates show that more than $500 billion of the Build Back Better’s cost will be shouldered by family businesses and the bill would impose top rates on these businesses exceeding 50 percent. As with increased spending, voters believe these tax increases will be inflationary.
The Federal Reserve has recognized the challenge inflation poses to families and businesses and announced it will begin tapering its quantitative easing purchases in the coming months. Congress needs to make a similar adjustment, beginning by ending efforts to sharply increase federal spending while raising taxes on America’s employers.
Statement on House Tax Plan – “Its Impact Cannot Be Overstated”
Today, the Main Street Employers Coalition issued the following statement:
The Main Street Employers Coalition strongly opposes the House Democratic tax plan. The plan is nothing short of a declaration of war on individually and family owned businesses, and is the most anti-Main Street program ever proposed.
The tax hike would tilt the playing field even further in favor of large corporations on Wall Street and against Main Street America by increasing the tax rate on public corporations by just 5.5 percentage points, compared to the 16.8 percentage point increase that applies to individually- and family-owned businesses. Worse, it would apply these higher rates to a broader tax base. The impact cannot be overstated.
The individually- and family-owned businesses facing this draconian tax increase represent about half of all pass-through income, and they employ tens of millions of workers. Taxing these businesses while they are still struggling to recover from the COVID-19 pandemic goes too far. Raising their taxes will directly impact inflation and the cost of living, because if companies have to pay more in taxes, those costs will be passed on to consumers in higher prices & make it harder to raise wages for its employees.
Instead, we should be doing everything we can to help these businesses get back on their feet, so that they can get Americans back to work to keep the economy recovering and moving in the right direction. The Democratic tax plan goes in the opposite direction.
Main Street Tells Congress: Enough is Enough
Yesterday, the Main Street Employers Coalition led more than 120 business trade associations in strong opposition to the Biden tax plan now being considered by Congress. Our letter makes clear that the proposals represent a direct assault on individually- and family-owned businesses by raising their taxes when they operate, when they are sold, and when they are passed on to the next generation. It also highlights the fact that the bill would violate the President’s pledge to not raise taxes on those making less than $400,000. The tax increases would directly harm the many individual and family business owners that make less than $400,000, including the 1.4 million private C corporation owners, family businesses with ownership shares held in trust, and entrepreneurs selling their business after a lifetime of work. With businesses still struggling to recover, Congress should avoid tax policies that harm Main Street—Enough is enough.
The full text of the letter is below:
Dear Chairman Neal:
The undersigned organizations representing millions of individually- and family-owned businesses strongly urge you to reject any measures that would raise taxes on Main Street employers as part of the upcoming reconciliation bill.
Individually- and family-owned businesses are the cornerstone of the American economy. They represent nearly all businesses, they employ the vast majority of private sector workers, and they are the building block upon which innumerable communities across this country are built.
The package of tax hikes being considered by the Biden administration and Congress represents a direct assault on these employers. Proposals to raise rates on pass-throughs and C corporations, cap the Section 199A deduction, increase the capital gains tax, and impose capital gains at death would raise taxes on Main Street businesses when they operate, when they are sold, and when they are passed on to the next generation.
This triple threat would lock in unprecedented levels of government spending and taxes that would handicap these businesses, and the communities that rely upon them, for decades to come. They would also violate the President’s pledge not to raise taxes on individuals making less than $400,000 a year. Many individual and family business owners that make less than $400,000, including the 1.4 million private C corporation owners, family businesses with ownership shares held in trust, and entrepreneurs selling their business after a lifetime of work, will be directly harmed by these tax increases.
As inflation and unemployment remain stubbornly high, Main Streets across the country remain boarded up, their businesses closed and their workers idle. Estimates suggest up to one-third of all private businesses have closed their doors during the COVID-19 lockdowns, with more joining them every day.
Congress should avoid tax policies that harm Main Street employers at any time, much less at this difficult moment in our nation’s history. The Biden tax hikes pose a triple threat to the ability of these individually- and family-owned businesses to survive an uncertain future, and we urge Congress to reject them.
Main Street Opposes $1.75 Trillion Tax Hike
The Main Street Employers coalition strongly opposes the Senate budget resolution released today. The resolution calls for $1.75 trillion or more in higher taxes in the coming years. These tax hikes represent a triple threat to Main Street businesses still struggling to recover from the pandemic – they hit employers when they earn profits, when they sell their business, and when they try to pass it on to their children. Voters — 2 to 1 — oppose these tax increases because they understand that the higher taxes will be passed on to American workers in the form of higher prices, fewer jobs, and lower wages. The Biden tax plan represents one of the most anti-Main Street plans ever proposed, and this budget resolution brings the Biden tax plan one step closer to becoming law. That’s bad news for Main Street and the millions of Americans who work there.
Statement on Proposal to Limit Section 199A 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 mainstemployers.org.
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