Conservative Groups and Main Street Employers Oppose Business SALT Pay-for in Tax Reform

The following letter was sent today to the U.S. House of Representatives and the United States Senate:

Business SALT Letter - Final 5.5.pdf

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We write today in opposition to any limits on the ability of businesses to deduct state and local taxes paid, unless offset dollar for dollar by new, broad-based, and permanent pro-growth tax reforms.

The ability of businesses to deduct state and local taxes paid on their profits is a longstanding “ordinary and necessary expense” embedded in the U.S. tax code. Corporations have been able to deduct state corporate income tax paid for as long as such taxes have existed. “Pass through” entities like Subchapter-S companies, partnerships, etc. were confirmed in their ability to deduct state and local profit taxes paid at the entity level in the 2017 “Tax Cuts and Jobs Act.” And businesses have always been able to deduct all other state and local taxes, such as property taxes and severance/extraction taxes.

The challenges businesses face in the current economic environment means that tax hikes on them should be avoided. Tariffs, wild stock and bond market swings, and widespread predictions of a recession mean that now is the wrong time to raise taxes on businesses.

President Trump and the Congressional Republican majority did not run on business tax increases. In fact, the GOP trifecta was achieved with the opposite promise–to stop tax increases across the board, and to make the Trump tax cuts permanent. Eliminating longstanding, ordinary and necessary business deductions raises average effective income tax rates.

Business taxes paid on business profits are fundamentally different from the individual SALT cap debate. Businesses deduct costs incurred for all ordinary and necessary expenses–rent, salaries, equipment, and state and local taxes. This has nothing to do with how much personal income tax, sales tax, and property tax an individual or family gets to deduct on their tax return. The two issues are only loosely connected because income taxes on businesses are apportioned based on where transactions take place, not where businesses are located.

It’s vitally important that all the provisions of the 2017 Tax Cuts and Jobs Act be made permanent. We look forward to working with you in the coming weeks to enact permanent, pro-growth tax reforms for American families and employers.

Sincerely,

Ryan Ellis, Center for a Free Economy

Kent Kaiser, Trade Alliance to Promote Prosperity

Patrick M. Brenner, Southwest Public Policy Institute

David Wallace, Fair Energy

Tom Giovanetti, Institute for Policy Innovation

James Davis, Fans for Fair Play

Paul Gessing, Rio Grande Foundation

Terry Neese, National Grassroots Network

Casey Givens, Young Voices

J.W. Delano, Southeast Texans for Liberty

S Corporation Association

National Ready Mixed Concrete Association

The Association for Hose and Accessories Distribution

Air Conditioning Contractors of America

National Roofing Contractors Association

National Wooden Pallet & Container Association

Hartz Mountain Industries

National Association of Convenience Stores

Saulius “Saul” Anuzis, American Association of Senior Citizens

Colonel Rob Maness, Gator PAC

The Sheet Metal and Air Conditioning Contractors National Association

Glass Packaging Institute

Air Conditioning Contractors for America

National Tooling and Machining Association

Precision Metalforming Association

Performance Racing Industry

Charles Sauer, Market Institute

John Goodman, Goodman Institute

Susan Carleson, Carleson Center for Welfare Reform

Jeff Cargerman, Inventors Project

George Landrith, Frontiers of Freedom

Norm Singleton, US Policy

Jeffrey Mazzella, Center for Individual Freedom

C. Preston Noell III, Tradition, Family, Property, Inc.

Ryan McGowan, Institute for Legislative Analysis

Larry Ward, Constitutional Rights PAC

Palmer Schoening, Family Business Coalition

Associated Equipment Distributors

National Lumber & Building Material Dealers Association

American Subcontractors Association

Small Business & Entrepreneurship Council

Forest Resources Association

National Association of Insurance and Financial Advisors

North American Association of Food Equipment Manufacturers

James L. Martin, 60 Plus Association

Chadwick Hagan, Founding Principles PAC

International Foodservice Distributors Association

Jim Pfaff, Conservative Caucus

Water and Sewer Distributors of American

North American of Food Equipment Manufacturers

Precision Machined Products Association

Pete Sepp, National Taxpayers Union

Patrice Onwuka, Independent Women’s Voice

Jim Edwards, Conservatives for Property Rights

Andrew Langer, Institute for Liberty

Gabriel Llanes, Legacy of Liberty PAC

Bartlett Cleland, Innovation Economy Alliance

Kevin Kearns, US Business and Industry Council

Julio Rivera, Reactionary Times

Autry Pruitt, New Journey PAC

Matthew Kandrach, Case for Consumers

Angie Wong, Capitol Hill Fight Club PAC

Independent Electrical Contractors

Energy Marketers of America

Leading Builders of America

National Association of Professional Insurance Agents

Specialty Equipment Market Association

National Council of Farmer Cooperatives

National Propane Gas Association

Ralph Benko, Capitalist League

Structural Insulated Panel Association (SIPA)

Wholesale Florist and Floral Supplier Association

Irrigation Association

National Utility Contractors Association

National Retail Federation

FCA International