Warren Seeks Clarity on Wealthy Beneficiaries of Republicans’ Proposed “Pass Through Deduction”

60% of tax savings from 199A tax deduction has been sucked up by top 1% of Americans
Text of Letter (PDF)
Washington, D.C. —U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Finance Committee, wrote to the Joint Committee on Taxation (JCT) requesting a breakdown, by income level, of which taxpayers benefit from the 199A Qualified Business Income Deduction.
Section 199A is a tax deduction that was created by President Trump’s 2017Tax Cuts and Jobs Act. It allows owners of certain businesses to deduct up to 20 percent of their business’ qualified income from their taxes. Republicans claim that the pass-through deduction helps small businesses that are often structured as partnerships.
However, the largest beneficiaries of the pass-through deduction are large firms and wealthy individuals, who are able to afford accountants and lawyers to exploit the deduction. For example, the owners of businesses maymischaracterize their labor incomeas business income to take advantage of the deduction.
According to ProPublica, these maneuvers have allowed the wealthiest one percent of Americans toreap nearly 60 percentof the tax savings created by the 199A deduction since its inception in 2017. The National Bureau of Economic Researchfound thatthere has been “no evidence” that 199A has any “real effects” on both investments in businesses or employment.
Congressional Republicans haveproposed expandingthe 199A deduction from a 20 percent deduction to a 23 percent deduction in their recent tax bill.
Senator Warren asked the committee to share the following information:
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