Legislation would make the Section 199A 20 percent pass-through deduction permanent, providing tax certainty for main street businesses across the country
Washington, D.C. – The National Association of Wholesaler-Distributors (NAW), which is the voice of the 8.2 trillion-dollar wholesale distribution industry, and employs more than 6 million U.S. workers, released the following statement endorsing H.R. 4721, the Main Street Tax Certainty Act introduced by Congressman Lloyd Smucker (R-PA):
“NAW is proud to endorse the Main Street Tax Certainty Act,” said NAW CEO Eric Hoplin. “The wholesale distribution industry extends our appreciation to Congressman Smucker for introducing this vital piece of legislation, and we urge Congress to pass this bill into law,” concluded Hoplin.
“Millions of main street businesses across the country including wholesaler-distributors face a tax increase if the 199A pass-through deduction is allowed to expire at the end of 2025. The looming deadline threatens the ability of businesses to continue to make payroll, hire, and invest in their local economies, “ said NAW Associate Vice President for Government Relations Alex Hendrie. “Congressman Smucker’s Main Street Tax Certainty Act stops this harmful tax increase and we urge all members of Congress support it,” concluded Hendrie.
In an effort to create some level of parity between C-Corporations and smaller businesses that file taxes as pass-through entities, Congress included a provision known as Section 199A in the Tax Cuts and Jobs Act of 2017. Section 199A created a 20% deduction for pass-through businesses. However, unlike the corporate tax cuts that were made permanent, Section 199A is set to expire at the end of 2025.
Pass-through business represent 95 percent of all businesses across the country and employ more than 78 million Americans. This includes the majority of wholesaler-distributors, which pay generous wages and benefits, as well as some of the highest effective income tax rates, even after the enactment of Section 199A. Many NAW members report paying an average effective rate of 30% in combined federal and state taxes, while operating with an average profit margin of just 2%, and many below 1%. A return to pre-TCJA tax rates punishes these companies that are our nations supply chain and an important engine of economic growth threatening their ability to hire, expand and invest in their employees and their communities.
Read our full letter endorsing the Main Street Tax Certainty Act here. You can view other groups who are endorsing this legislation here.
NAW is one of America’s leading trade associations, representing the $8.2 trillion wholesale distribution industry in Washington, D.C. Founded in 1946, NAW is comprised of national, regional, and state employers of all sizes, industry trade associations, partners, and stakeholders spanning all sectors of distribution.
NAW represents a diverse industry that employs more than 6 million workers throughout the United States and accounts for 1/3rd of the U.S. GDP. This unique position allows us to bring together the largest and best-in-class distribution firms to share best practices with their non-competing peers, making every corner of our industry stronger. NAW works proactively, supporting pro-business policies and pro-business candidates, building relationships with political leaders, and sharing the industry message with key audiences and stakeholders, to tell the story of wholesale distribution and underline the value our industry provides.
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