SBLC Alert - What’s Going to Happen With Taxes This Year? Part I: Individual Taxes

What Was in the Provisions that Passed the Ways and Means Committee?

The portion of the reconciliation bill passed by the House Ways and Means Committee on September 15th includes a lot of new tax provisions. Among them, are some significant taxes on pass-through entities and small business owners. Despite the mantra of “tax the rich,” at least some of these provisions will hit a number of small business owners, many of whom would not be typically be considered rich, particularly hard.

In this alert we will focus on the individual tax provisions coming out of the Ways and Means Committee.

One bright spot is that the Ways and Means Committee’s provisions do not eliminate the step up in basis for assets going through an estate. The SBLC has explained why this proposal, advanced by the Administration, would have destroyed many small businesses and hit many middle and upper middle-class taxpayers with a new capital gains tax. Unfortunately, it is too early to assume that we won’t see this provision surface again as the reconciliation bill (recall this type of bill only requires a simple majority of votes in the Senate) is finalized in the House and potentially subject to modifications in the Senate. If the Senate and the House pass different versions of the reconciliation bill, then it is conceivable that even if this provision was not included in either version, it could still emerge during the conference committee where the differences between the versions are ironed out. Some think that, because this provision is one of the most controversial, it will be introduced at the last hour to shelter Democratic members of Congress from the avalanche of criticism sure to follow.

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