MSCI Tells Members Of Congress Not To Raise Taxes On Small Businesses

With the U.S. Chamber of Congress, National Association of Wholesaler-Distributors, S Corp Association, and nearly 350 other organizations, last week the Metals Service Center Institute (MSCI) sent a letter to U.S. lawmakers asking that they preserve the federal deduction for state and local business taxes, or B-SALT deduction.

As Connecting the Dots  readers are aware, federal policymakers are debating whether to extend the 2017 Tax Cuts and Jobs Act (TCJA) and some have suggested eliminating this important provision.

MSCI’s letter, available at this link, noted the nonpartisan nonprofit Tax Foundation has estimated that eliminating the deduction for state and local business taxes imposed on pass-through entities, like partnerships and S corporations, would burden these firms with more than $226 billion in higher taxes over the next 10 years.

Additionally, disallowing the deduction for state and local corporate income taxes would increase corporate tax burdens by $223 billion over 10 years. 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,” the letter concluded. “This would cause lasting harm to the U.S. economy by depriving American businesses of the resources they need to invest, hire, and grow.”