MSCI Signs Letter Opposing Tax Increases On Pass Through Businesses

On June 22, the Metals Service Center Institute joined the S-Corp Association and more than 100 trade associations in voicing opposition to legislation that would weaken the Section 199A pass-through deduction.

As Connecting the Dots readers are aware, this provision is an essential part of the tax code, helping individually- and family-owned businesses remain competitive in an era of economic consolidation and concentration. Indeed, Section 199A has enabled pass through businesses that were hardest hit during the pandemic to survive. As the letter released today makes clear, rolling back or otherwise limiting the deduction would have a severely detrimental effect on the 95 percent of American businesses organized as pass-throughs.

The letter, which was sent to leaders on the U.S. House and Senate tax-writing committees, explained, “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.”

The letter warned, “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” and said “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.”

Read the full letter here.