Wine & Spirits Wholesalers of America (WASA) joined Parity for Main Street Employers (PMSE) coalition in sending a letter of opposition to the House Ways and Means Committee, as it considers raising tax rates to pay for the temporary suspension of the $10,000 federal limit on state and local tax deductions (SALT).
The suspension would primarily benefit wealthy taxpayers in high-tax Democratic strongholds such as New York, New Jersey, Illinois and California.
The coalition represents millions of individually and family-owned businesses employing tens of millions of private-sector workers in every community and every industry, including wine and spirit wholesalers, retailers and manufacturers.
“All of our members are family-owned businesses,” said WSWA Chairman Sydney Ross of Great Lakes Wine & Spirits. “The proposed legislation would hike our tax rates and make it even harder to compete with corporations in an open and competitive marketplace.”
“Our members invest and create jobs in communities across the country,” added WSWA President and CEO Michelle Korsmo. “We find immense value in this coalition of industries doing the same to fight for parity with corporations under the law.”
Family businesses across the country organized as S corporations or pass-through businesses, including nearly all WSWA members, pay 51% of all business income taxes in the United States. Under the proposed legislation, these taxes would rise, while providing little or no relief.
Individual tax rates will increase to 39.6% and apply to family businesses structured as pass-throughs. This would be further compounded by a measure set to lower the top income tax rate threshold from $600,000 to $496,000 (joint) for the next five years. Furthermore, the SALT cap does not apply to business SALT deductions, meaning most WSWA’s members would see no direct benefit from the relief but will be fully affected by the rate increase.
Under these proposed measures, WSWA members are at risk to lose the parity, or equality, with large corporations achieved through 2017’s Ta Cuts and Jobs Act. A recent study by EY reported that the 2017 bill largely succeeded in balancing the tax code, but only in the current deduction and 37 percent rate structure stay in place.