{"id":121028,"date":"2021-09-07T17:35:00","date_gmt":"2021-09-07T17:35:00","guid":{"rendered":"https:\/\/fin2me.com\/?p=121028"},"modified":"2021-09-07T17:35:00","modified_gmt":"2021-09-07T17:35:00","slug":"democrats-eye-reforms-to-trump-tax-break-for-businesses-as-part-of-3-5-trillion-spending-plan","status":"publish","type":"post","link":"https:\/\/fin2me.com\/business\/democrats-eye-reforms-to-trump-tax-break-for-businesses-as-part-of-3-5-trillion-spending-plan\/","title":{"rendered":"Democrats eye reforms to Trump tax break for businesses as part of $3.5 trillion spending plan"},"content":{"rendered":"<ul>\n<li>Congressional Democrats are considering reforms to the 20% pass-through tax deduction for businesses as part of a $3.5 trillion spending measure.<\/li>\n<li>They would phase out tax benefits for those with income exceeding $400,000 and make the tax cut available to more entrepreneurs below that threshold, according to a discussion list obtained by CNBC.<\/li>\n<li>Most of the deduction&#x27;s benefits accrue to taxpayers with income of more than $500,000.<\/li>\n<\/ul>\n<p>Congressional Democrats are considering reforms to the 20% pass-through tax deduction as part of a $3.5 trillion federal spending package.<\/p>\n<p>Democrats&#x27; proposal would phase out the tax break for business owners with taxable income exceeding $400,000, according to a discussion list obtained by CNBC. It would also make the tax cut available to more people below the $400,000 threshold by removing some existing restrictions.<\/p>\n<p>A discussion list is a draft of ideas that lawmakers assemble before formally pitching them in the House or Senate. Democrats are weighing changes to the tax code to help raise money for up to $3.5 trillion in spending on climate, education, paid leave and other measures.<\/p>\n<p><strong>More from Personal Finance:<\/strong><br \/>End to federal unemployment benefits leaves many uncertain and scared<br \/>Here are some strategies to pay off that big credit card debt<br \/>College debt crisis drives more students away from four-year schools<\/p>\n<p>Reforms to the pass-through deduction would raise &quot;significant revenue while providing a new tax cut for Main Street small business owners,&quot; according to the list.<\/p>\n<p>The deduction, also known as 199A, was created by Republicans&#x27; 2017 tax law, President Donald Trump&#x27;s signature legislative achievement. It lets the owners of pass-through businesses \u2014 such as sole proprietors, partnerships and S corporations \u2014 write off 20% of their business income.<\/p>\n<p>Most of its benefits accrue to wealthy taxpayers.<\/p>\n<p>In 2018, about 53% of its $40 billion value went to those with incomes over $500,000, according to the Joint Committee on Taxation, a nonpartisan body that reports to the U.S. Congress. By 2024, that share is expected to grow to 61% of a total $60 billion.<\/p>\n<h2>Potential changes<\/h2>\n<p>While Democrats&#x27; discussion list is short on details, the pass-through policy changes it floats sound like concepts that Senate Finance Committee Chairman Ron Wyden, D-Ore., included in a recent bill.<\/p>\n<p>Wyden&#x27;s legislation would phase out the 20% deduction for business owners whose taxable income exceeds $400,000, eliminating the tax break completely once income breaches $500,000.<\/p>\n<p>The Wyden-sponsored bill would also expand eligibility for the tax break.<\/p>\n<p>Currently, owners of certain service businesses \u2014 like lawyers, doctors, veterinarians and financial advisors \u2014 can&#x27;t get the full deduction if their income exceeds $164,900 (single filers) or $329,800 (married couples filing jointly) in 2021. They can&#x27;t get it at all if their income exceeds $214,900 (single) or $429,800 (married).<\/p>\n<p>The pass-through deduction is scheduled to disappear after 2025, meaning any reforms would end after a few years&#x27; time absent an extension. President Joe Biden didn&#x27;t propose changes to the tax break in his annual budget.<\/p>\n<p>Some business groups have argued that limiting or repealing the deduction would hurt small businesses and lead to fewer jobs, lower wages and less economic growth.<\/p>\n<p>&quot;Such changes would amount to a direct tax hike on America&#x27;s Main Street employers, a key reason why the tax plan released by the White House in March left the deduction fully intact,&quot; according to a joint letter published in June by a coalition of trade associations.<\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/09\/07\/democrats-eye-reforms-to-20percent-pass-through-tax-deduction-for-businesses.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Congressional Democrats are considering reforms to the 20% pass-through tax deduction for businesses as part of a $3.5 trillion spending measure. They would phase out [&#8230;]<\/p>\n","protected":false},"author":3,"featured_media":121027,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Democrats eye reforms to Trump tax break for businesses as part of $3.5 trillion spending plan - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/business\/democrats-eye-reforms-to-trump-tax-break-for-businesses-as-part-of-3-5-trillion-spending-plan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Democrats eye reforms to Trump tax break for businesses as part of $3.5 trillion spending plan - Fin2me\" \/>\n<meta property=\"og:description\" content=\"Congressional Democrats are considering reforms to the 20% pass-through tax deduction for businesses as part of a $3.5 trillion spending measure. 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