PIA, along with over 190 business groups, wrote to congressional leadership this week to oppose proposed tax hikes on small business owners as part of the newest effort to pass a reconciliation bill this Congress. This renewed effort follows a failed effort in 2021 to pass a more sweeping reconciliation measure. To pay for the latest reconciliation proposal, congressional Democrats are looking to raise taxes on small, individually, and family-owned businesses.
Two tax increases under consideration would fall entirely on small, individually, and family-owned businesses. One would expand the 3.8 percent Net Investment Income Tax (NIIT) to individuals and families who actively participate in their business. The second provision would limit the ability of small, individually, and family-owned businesses to fully deduct their losses during an economic downturn by expanding and extending the so-called “excess business loss limitation” for “noncorporate taxpayers.”
Congress should avoid raising taxes on small businesses at any time, but especially after two years of challenging pandemic shutdowns and increased inflation. PIA will continue to work with congressional offices to oppose any tax increase on small business owners.