With Republicans planning a $4.6 trillion, 10-year extension of President Donald Trump’s 2017 tax cuts, small business advocates are urging lawmakers to make the extension permanent through the budget reconciliation process.
The National Federation of Independent Business (NFIB) sent a letter to Congress in support of cementing the Section 199A deduction, also known as the Qualified Business Income deduction, into the tax code forever.
Implemented through the sunsetting 2017 Tax Cuts and Jobs Act, the QBI deduction allowed eligible American business owners – roughly 26 million – to deduct up to 20% of their qualified business income.
The NFIB says the economy would grow by $750 billion over the next 10 years and add 1.2 million jobs annually if the provision is made permanent.
“In less than a year, America’s small businesses are set to face a massive tax hike that would decimate their ability to hire, grow, pay their employees, and keep their doors open,” NFIB Senior Vice President for Advocacy Adam Temple said. “[T]he budget reconciliation process presents the best opportunity for Congress to immediately act.”
Extending the QBI deduction for the next 10 years alone would add an estimated $780 billion to the federal budget deficit, according to the Committee for a Responsible Federal Budget (CRFB).
Republicans are already divided over temporarily extending the TCJA in the House’s narrowly passed congressional budget resolution. That resolution extends the TCJA for at least the next 10 years.
If Republicans decide during the reconciliation process to make the TCJA cuts permanent, as the NFIB requests, the federal deficit could increase by $5.4 trillion over the next 10 years without corresponding spending cuts, according to a new Tax Foundation report. Trump adviser Elon Musk has vowed to cut $1 trillion in wasteful government spending annually through the Department of Government Efficiency.
The analysis, released Wednesday, also estimates that over the next decade, a projected $710 billion in economic growth would offset the $4.5 trillion in revenue losses by only 16%.
Trump and a growing number of Republican lawmakers are already eyeing a permanent extension through the reconciliation process.
House Speaker Mike Johnson, who was barely able to convince most fiscal hardliners in his own chamber to vote for a temporary TCJA extension, told reporters Wednesday that moving forward, tax cut permanence is now “our commitment.”
