House Tax Team Advocates for Permanent Extension of Sec. 199A
This week, Rep. Lloyd Smucker (R-PA)—leader of the newly formed House Ways & Means Committee’s Main Street Tax Team—hosted a forum in southern York County, PA to discuss the importance of extending Sec. 199A of the Internal Revenue Code. Recall, this is the provision in the Tax Cuts and Jobs Act (TCJA) of 2017 that attempts to level the playing field in the tax code between larger corporations organized as C corporations and those in our sector organized as pass throughs. The tax rate for C corporations in the TCJA was lowered to 21 percent and Sec. 199A is a 20 percent tax deduction for S-Corporations and other pass-through entities.
Eight individuals ranging from financial advisors to manufacturers to a dairy farm owner testified at the roundtable in support of extending 199A and the negative effects if Congress fails to act next year. The provision, like many other pieces of the TCJA, expire at the end of 2025. Rep. Smucker is the lead sponsor in the House of the Main Street Tax Credit Act (H.R. 4721) which would extend this 20 percent deduction permanently. The legislation currently has 185 cosponsors, but unfortunately only 2 Democrats are on board.
Looking forward, action on this bill is highly unlikely this year. As we have mentioned, tax policy will take center stage next year as $4.6 trillion in tax benefits are set to expire January 1, 2026. Next year will also be a new Congress—the 119th Congress—and all current pending legislation dies when the 118th is gaveled out sometime in late November or December, depending on the length of the Lame Duck session following the election. The bottom line is that this bill will have to be reintroduced next year and ABMA will be working hard with our champions on and off the Hill to recruit bipartisan support for this critical legislation.
Labor Negotiations Continue as Port Strike Deadline Approaches
ABMA continues to follow progress on labor negotiations between the International Longshoremen’s Association (ILA), representing dock workers, and the U.S. Maritime Alliance (USMX), which represents ocean carriers and port terminal operators. The parties have until September 30 to resolve contract differences over worker compensation and automation. If a new labor agreement cannot be forged, the ILA has vowed to strike which would shut down all East Coast and Gulf Coast ports and create considerable supply chain disruptions. We are hearing that ILA and USMX representatives are planning to sit down in early September to resume negotiations. Letters from the business community to President Biden to intervene in the labor negotiations have thus far gone unheeded. It is difficult to imagine that the Administration would allow a port strike just weeks before the November election, but we will keep you apprised of developments.
