Brabant explains why the 20% Small Business Deduction should be made permanent and why Beneficial Ownership reporting requirements should be repealed
WASHINGTON, D.C. (June 17, 2024) – NFIB Vice President of Federal Government Relations Jeff Brabant joined C-SPAN’s Washington Journal to discuss the issues impacting Main Street businesses nationwide. Brabant highlights the importance of making the 20% Small Business Deduction permanent, and the challenge burdensome regulations, such as the beneficial ownership reporting requirements, pose for small businesses.
On why Congress should make the 20% Small Business Deduction permanent:
“The vast majority – over 90% – of small business owners are pass through businesses. That means they pay the individual rate. One thing that was put into the Tax Cuts and Jobs Act to help give parity to the small businesses…was the 20% deduction…That brings [a small business’] effective tax rate down a lot closer to the C Corp rate. The other thing that goes into that when you’re paying the individual rate is that five out of seven of the marginal income rate brackets also increase at the end of 2025. So, that top rate goes from 37% to 39.6%, the deduction goes away, and we’re looking at a significant tax increase on, we estimate, over 30 million small business owners if Congress fails to act.”
On how Beneficial Ownership reporting requirements are proving burdensome for Main Street:
“The one that’s really flying under the radar right now, that we’re trying to make sure Congress and everyone is aware of, is this new beneficial ownership reporting requirement. This one is uniquely targeted just at small business owners…and it’s going to require any business with 20 or fewer employees and less than $5 million in revenue to register their business and anyone who is a beneficial owner.
“By registering with [FinCEN], you have to, by the end of the year if you’re one of these small businesses, go to their website and file your business address, a copy of any owners’ driver’s licenses, as well as a few other pieces of information including taxpayer identification numbers. You have to file all of that with them by the end of the year, or you can go to jail for up to two years and get up to $10,000 in fines with $591 a day for late filings. So, this is a bit of a scary thing [for small business owners]. It was done to address money laundering, but the big concern is that this is not a one-and-done registration. If any of the information that you provided changes, you have 30 days to update it…It’s a lifetime commitment for small business owners.”
Watch Brabant’s interview here: https://www.c-span.org/video/?536316-3/jeff-brabant-state-small-businesses-us
