Joint Trades Letter Supporting Section 199A of the Internal Revenue Code

The Honorable Ron Wyden
Chairman
Committee on Finance
United States Senate
219 Dirksen Senate Office Building
Washington, D.C. 20510

The Honorable Richard Neal
Chairman
Committee on Ways and Means
United States House of Representatives
1120 Longworth House Office Building
Washington, D.C. 20515

The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate
219 Dirksen Senate Office Building
Washington, D.C. 20510

The Honorable Kevin Brady
Ranking Member
Committee on Ways and Means
United States House of Representatives
1120 Longworth House Office Building
Washington, D.C. 20515

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 planreleased 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 deductionintact and we strongly oppose any attempt to cap or repeal it by Congress.

Sincerely,

The American Bankers Associations

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

NACSNAHAD, 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