The American Supply Association is part of a coalition of more than 70 organizations that opposed the Senate-passed Inflation Reduction Act.
These more than 70 organizations represent millions of Main Street businesses and employ tens of millions of workers. The coalition notes inflation is at 40-year highs, there have been two consecutive quarters of negative economic growth and there is a shrinking small business sector, yet, as the coalition also points out, the Inflation Reduction Act does nothing to address these immediate issues, even as it increases the burden of the tax code shouldered by America’s small and family-owned businesses.
“The Biden Administration claims the savings in the IRA are ‘front-loaded,’ and will reduce the deficit in the short-term, helping easy inflationary pressures,” the coalition wrote in a letter addressed to Speaker of the House Nancy Pelosi, House Minority Leader Kevin McCarthy, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell.
“That is simply not the case. Recent analysis by the Congressional Budget Office, Penn-Wharton and others shows the Inflation Reduction Act would increase prices in the short term and do little to bring them down in the long run.”
At the same time, the coalition points out, the bill would give the IRS an additional $80 billion in funding, more than half of which would pay for thousands of additional IRS agents to conduct millions of additional audits.
The coalition supports addressing the tax gap and opposes illegal tax evasion, but as former National Taxpayer Advocate Nina Olson observed recently, it is wrong and counterproductive to characterize the entire tax gap as willful tax evasion, the coalition states.
“From experience, we know many, if not most, of these additional audits will be conducted on the owners of family businesses who have fully complied with the tax code,” the coalition wrote.
Finally, the Warner Amendment adopted at the last minute presented the Senate with a clear choice between Wall Street and Main Street, and the Senate chose Wall Street, the coalition points out. The amendment extends for two years the Section 461(l) cap on losses a business owner is permitted to claim.
This $52 billion tax hike on pass-through businesses, the coalition notes, was adopted with almost no consideration, and the revenues it raises were used to offset the cost of exempting private equity investors from the 15% corporate minimum tax.
“The cap on active pass-through loss deductions is bad policy at any time, but it is particularly harmful when the economy is weak and an increasing number of businesses are suffering losses,” the coalition emphasizes. “The timing of this amendment’s adoption could not have been worse. The Inflation Reduction Act would fail to reduce price pressures even as it raises the cost of the tax code to small and family-owned businesses at a time of economic weakness. We ask that you reject the IRA’s Main Street tax hike when it is considered by the full House.”
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