As House taxwriters prepare for a possible markup of major tax legislation, ‘Main Street’ business owners and organization affiliates shared differing perspectives on whether expiring provisions of the Tax Cuts and Jobs Act (TCJA) should be extended.
Pro-TCJA industry executives.
In a May 7 letter to House Ways and Means Chair Jason Smith (R-MO) and Senate Finance Committee Chair Mike Crapo (R-ID), leaders of small business associations in the restaurant and hotel industries advocated for the preservation of “business, individual, and family tax provisions” enacted during President Donald Trump’s first term and set to expire at the end of this year.
The presidents and CEOs of the American Hotel & Lodging Association, International Franchise Association, and National Restaurant Association told the Republican chairmen that “millions of small and family-owned businesses across the nation” would see tax hikes should the provisions sunset without congressional intervention.
Ways and Means is expected to consider a tax bill to extend the TCJA by at least another 10 years as part of a larger budget reconciliation package Trump has referred to as “one big, beautiful bill.” Under the House-passed budget framework, Ways and Means can spend up to $4.5 trillion on so-called Trump tax cuts. Tax expenditures will be offset by spending cuts to other federal programs and tariff revenues, Republican lawmakers and the Trump administration maintain.
“Many of the businesses represented by our associations have felt the impacts of inflation and economic uncertainty over the last few years,” the CEOs wrote in their joint letter. “Congress acting swiftly to extend pro-growth tax provisions would provide much-needed certainty for the hospitality, tourism, and hundreds of other industries.”
The letter cites “challenging headwinds” members are grappling with due to “tremendous economic uncertainty.” The associations urged Congress to make permanent TCJA provisions like the Code Sec. 199A small business deduction, “expanded business interest expense standard, and full expensing,” which enable establishments to “reinvest in their businesses, employees, and communities.
House Dems told otherwise.
The House Democratic Steering and Policy Committee conducted a hearing May 8 where the lower chamber’s minority leadership railed against Trump’s tariff rollout, agency layoffs, and tax policies benefiting large companies and wealthy individuals.
“Donald Trump and Republicans who continue in this Congress to rubber-stamp his extreme agenda are crashing the economy in real time, driving us toward a recession,” said House Minority Leader Hakeem Jeffries (D-NY) in his opening remarks Thursday morning. “Why? So that they can provide tax breaks to their billionaire donors like Elon Musk instead of supporting small businesses, unknowingly inflicting economic pain on hard-working entrepreneurs and small business owners.”
The hearing’s first witness was Michael Negron, a policy fellow at Groundwork Collaborative, a nonprofit policy think-tank. Negron in his prepared testimony asserted that “tariffs are a tax that a business pays — typically an American business — when the products they ordered come into the country.”
When asked by Representative Lateefah Simon (D-CA) to explain how the Section 199A pass-through deduction affects small businesses compared to larger companies, Negron explained that the benefit scales relative to the size of a business. It may sound “like a perfectly fine deal” for small businesses to deduct 20% of their qualified business expenses, he said, but “when you think about it, the more money you make, the bigger the tax exemption.”
Negron used the example of a “handyman who maybe pulls in $80,000 a year” whose Section 199A benefit pales in comparison to the “significant exemptions” that “multi-million-dollar LLCs” receive. Consequently, 74% of the benefits “flow to the wealthiest 5% of businesses” while pass-throughs with adjusted gross incomes under $100,000 “took home an average deduction of about $2,000.”
Walt Rowan, president of a Pennsylvania-based glass company and co-chair of the Small Business for America’s Future, testified during the hearing’s second panel that the Tax Code under the TCJA “continues to disadvantage businesses like mine.”
Rowan said that “unlike my corporate competitors that got a big, huge 40% reduction in their tax rate, I didn’t benefit at all from the small business tax deduction. Our surveys consistently show the deduction did nothing to help small businesses hire workers, increase wages, pay down debt, or invest in growth opportunities as was promised.”
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