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HCCC Signs-On to B-SALT Tax Coalition Letter
A concerning proposal came to light that would create a backdoor tax increase by capping the tax deduction for state and local business taxes (B-SALT). To stop this effort before it gains any traction, the US Chamber of Commerce organized a coalition letter calling on Congress to reject this proposal. The letter is below.
"The undersigned organizations support extending the pro-growth tax policies that have raised worker's wages, led to more well-paying jobs, and supported stronger economic growth. The individual, business, and estate ta provisions of the 2017 Tax Cuts and Jobs Act ("TCJA") have proven instrumental in achieving those goals and we appreciate the early steps Congress has taken to make them permanent.
We are concerned that some are now suggesting a policy that would weaken these pro-growth reforms by capping or otherwise limiting the deduction for state and local business taxes ("B-SALT deduction"). Doing so would be a mistake. State and local business taxes are not optional; they are ordinary and necessary expenses incurred in carrying on a trade or business. As such, limiting the B-SALT deduction would lead to a massive tax increase on businesses of all sizes. And because all states levy business taxes, employers in every state would be negatively impacted. According to the Tax Foundation:
eliminating the deduction for state and local business taxes imposed on pass-through entities, like partnerships and S corporations, would burden them with more than $226 billion in higher taxes over 10 years;
disallowing the deduction for state and local corporate income taxes would increase corporate taxes by $223 billion over 10 years; and
applying this limit to corporations' state and local property taxes would increase their taxes by an additional $209 billion over the same period.
All told, limiting the B-SALT deduction would raise taxes on American businesses of all sizes by more than $600 billion, significantly undermining the pro-growth elements of the TCJA that Congress otherwise seeks to preserve. This would cause lasting harm to the U.S. economy by depriving American businesses of the resources they need to invest, hire, and grow.
We urge Congress to prevent a backdoor tax increase on American businesses by preserving the B-SALT deduction as an essential feature of the federal tax system."
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