PIA, Business Groups, Oppose Harmful Tax Provisions in Inflation Bill

PIA today joined with more than 70 business groups in a letter to Congressional leadership to oppose the Senate-passed Inflation Reduction Act due to tax provisions that would harm small businesses. The Inflation Reduction Act passed the Senate over the weekend, and includes provisions related to climate issues, the cost of prescription drugs and changes to the tax code.

Of particular concern to PIA is the late inclusion of a provision that extends for two years the Section 461(l) cap on losses a business owner is permitted to claim. This amounts to a $52 billion tax hike on pass-through businesses. PIA has been active in successfully opposing previous damaging small business and/or tax-related proposals in this majority-led reconciliation effort over the last year. Unfortunately, this cap on losses provision was adopted at the last minute in the Senate as an amendment with almost no consideration or debate.

The letter notes that after two years of challenging pandemic shutdowns and increased inflation this is perhaps the worst time in recent memory for Congress to make life more difficult for small business owners who organize as passthroughs. The cap on active pass-through loss deductions is bad policy at any time, but it is especially damaging given the current economic conditions facing employers.

The House is expected to consider this legislation later this week and to pass it, given the Democratic majority. PIA will continue to work against damaging provisions to small business owners in this Congress.