MSCI Tells U.S. Senators To Act Quickly To Avoid Tax Increases

This past weekend, the U.S. Senate began consideration of a 940-page bill, the One Big, Beautiful Bill Act (OBBBA), which, if approved by the Senate and then the U.S. House of Representatives, would implement President Donald Trump’s spending and tax priorities. (As readers may recall, the U.S. House approved its own version of the legislation in May, but the Senate version differs significantly. House lawmakers will need to consider it again even if the Senate approves it.)

With allies in the business community, the Metals Service Center Institute (MSCI) sent four letters to senators asking them to vote for the legislation in order to avoid tax increases on U.S. families and small and large businesses.

The first letter, organized by the U.S. Chamber of Commerce, called for permanent extension of the individual, family, and business tax policies approved in 2017 as part of the Tax Cuts and Jobs Act (TCJA). The letter noted that after the TCJA was implemented, hourly wages for production and nonsupervisory workers increased from an average of 2.4 percent over the previous two years to 3.7 percent by October 2019.

The second letter, available at this link, was signed by 120 trade associations and specifically asked Senate leaders to expand the Section 199A deduction for pass-through entities from 20 to 23 percent. The letter said, “Expanding Section 199A will help preserve tax parity between pass-through businesses and larger public corporations while helping ensure the Senate bill does not raise taxes on millions of Main Street businesses.” (The S-Corp Association has more information on the importance of the Section 199A deduction at this link.)

While the OBBBA includes dozens of provisions that would reduce tax burdens for families and businesses, a few are particularly beneficial for industrial metals mills and service centers. These include policies to:

• Protect small businesses by reducing individual rates and raising the exemption from the federal estate tax;
• Permanently reinstate immediate research and development expensing, full expensing for capital equipment purchases, and an EBITDA-based interest deductibility standard; and
• Incentivize new manufacturing investment by creating a new factories deduction, expanding Section 179 capital equipment expensing, and enhancing the Section 48D advanced manufacturing investment credit.

With the National Association of Manufacturers, MSCI also signed a letter to Senate leadership specifically supporting these provisions. One other important part of the legislation: Senators also agreed to use House-adopted language that would raise the state and local income tax (SALT) deduction limit from $10,000 a year to $40,000. As the S-Corp Association reported, the Senate version of the bill also removed language that would have prevented pass-through businesses from deducting their full SALT, potentially invalidating longstanding efforts to provide SALT parity between corporations and pass-through businesses. Over the weekend, MSCI also joined the S-Corp Association in sending a letter to Senate leaders praising the SALT compromise and other parts of the legislation that would help small business and all metals workers. Read that letter at this link.

The S-Corp Association has more information on SALT parity at this link.

Senators will continue to debate the OBBBA this week. Republicans leaders hope to advance it to a final vote by the Fourth of July recess.