Business leaders want a Trump-era tax cut benefitting small businesses to become permanent.
The cut sunsets in 2025 unless Congress votes to extend it. However, President Joe Biden vows he will veto such legislation if it ever comes to him for signature.
“Now, President Biden’s Budget will cut taxes for working families and lower deficits by trillions of dollars over a decade by making the wealthy and big corporations pay their fair share—and no one earning less than $400,000 per year will pay a penny in new taxes,” a White House fact sheet states.
Still, business leaders say the tax cut benefitted many small business owners who are making well under that $400,000 mark.
The Tax Cuts and Jobs Act of 2017 contains a Small Business Deduction. The deduction allows small businesses to write off up to 20% of their income if qualified.
The act also allows deductions on new equipment and other qualified assets. Supporters insist the deductions benefitted fledgling sole proprietorships and partnerships too — not just big corporations.
For example, entrepreneur Michael Ervin recently told the House Committee on Ways and Means how the cuts had helped his five-year-old startup.
Ervin founded Coal River Coffee Company in St. Albans, West Virginia. He says his business benefited greatly from cuts in the Jobs Act, the Kentucky Lantern reported. The company currently employees about 12 people.
“After the passage of the Tax Cuts and Jobs Act, LLCs and other pass-through businesses like mine were able to benefit from the newly minted Small Business Deduction, also known as the 199(a) deduction. This provision has allowed me to deduct up to 20% of my business income, which has let me invest in my business, my employees, and my community,” Ervin said.
Critics argue the deduction disproportionately benefits wealthy corporations and increases the federal debt.
Former President Donald Trump would likely approve extending the tax breaks if elected in November.
Image: Depositphotos
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