GCCA Joins Coalition Letter Opposing Tax Provisions in Reconciliation

GCCA recently joined with over 190 coalition partners in sending a letter to Congressional leaders opposing the inclusion of a detrimental tax provisions in the reconciliation package currently being considered.  Two tax increases under consideration would fall entirely on small, individually, and family-owned, closely-held businesses: 1) expanding the 3.8 percent Net Investment Income Tax (NIIT) to individuals and families who actively participate in their business, and 2) limiting 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.” Combined, these would increase revenues by more than $400 billion over ten years, shouldered entirely on the backs of small, individually, and family-owned businesses.

Expanding the 3.8 percent NIIT represents an eleven percent increase in the rates imposed on family-owned businesses. Based on Treasury data, it is estimated that up to 1 million small and family-owned businesses, representing over half of all pass-through business activity, would be at risk of having their rates increased under this policy. This small business tax hike would hurt the ability of businesses that survived the worst global pandemic in a century to remain viable in the coming months. Expanding the NIIT would raise taxes on small and family-owned businesses when they are profitable, while extending and expanding the “excess loss limitation” rules would hurt them in the next downturn.

Raising taxes on small and family-owned businesses with the economy on the brink of a recession, a situation which is compounded by the other post-pandemic challenges they face, harms not only the businesses but the families and communities who rely on them.  GCCA will continue working with coalition partners to fight against these detrimental proposals.