Coalition Letter to Congress on Preserving the B-SALT Deduction

To the Members of the United States Congress:

The undersigned organizations support extending the pro-growth tax policies that have raised worker’s wages, led to more well-paying jobs, and supported stronger economic growth. The individual, business, and estate tax provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”) have proven instrumental in achieving those goals and we appreciate the early steps Congress has taken to make them permanent.

We are concerned that some are now suggesting a policy that would weaken these pro-growth reforms by capping or otherwise limiting the deduction for state and local business taxes (“B-SALT deduction”). Doing so would be a mistake. State and local business taxes are not optional; they are ordinary and necessary expenses incurred in carrying on a trade or business. As such, limiting the B-SALT deduction would lead to a massive tax increase on businesses of all sizes. And because all states levy business taxes, employers in every state would be negatively impacted. According to the Tax Foundation:

• eliminating the deduction for state and local business taxes imposed on pass-through entities, like partnerships and S corporations, would burden them with more than $226 billion in higher taxes over 10 years;
• disallowing the deduction for state and local corporate income taxes would increase corporate taxes by $223 billion over 10 years; and
• applying this limit to corporations’ state and local property taxes would increase their taxes by an additional $209 billion over the same period.

All told, limiting the B-SALT deduction would raise taxes on American businesses of all sizes by more than $600 billion, significantly undermining the pro-growth elements of the TCJA that Congress otherwise seeks to preserve. This would cause lasting harm to the U.S. economy by depriving American businesses of the resources they need to invest, hire, and grow.

We urge Congress to prevent a backdoor tax increase on American businesses by preserving the B-SALT deduction as an essential feature of the federal tax system.

Sincerely,

Missouri

Branson/Lakes Area Chamber of Commerce & CVB

Greater Kansas City Chamber of Commerce

Missouri Chamber of Commerce and Industry

St. Charles Regional Chamber