SMALL BUSINESS TAX ISSUES

Tax Cut Permanence

In December 2017, the Tax Cuts and Jobs Act was signed into law, resulting in major beneficial changes for businesses. Included in the provisions were substantial reductions in the corporate and pass-through tax rates, a doubling of the estate tax exemption threshold, and full immediate expensing of HVAC equipment purchases for businesses. The issue here is that the individual-side provisions like the pass-through tax rate reduction and raised estate tax threshold have an expiration date and are set to sunset in 2025.

Since many HARDI members are small business and pass-through entities, we are pushing for permanence of the individual-side provisions from the Tax Cuts and Jobs Act. This will result in more predictability to allow HARDI members to have more effective business or succession planning for the future.

Relevant Legislation:
Main Street Certainty Act (H.R. 216)

Issue Brief


Estate Tax Repeal

HARDI members believe the estate tax should be repealed because it disproportionately impacts small and family-owned businesses. Compliance costs associated with the estate tax and the substantial burden of the tax itself cause small businesses to forego the hiring of new employees, expansion of businesses, and in many cases, force the sale of the company.

HARDI supports the full and immediate repeal of the Estate Tax.

Relevant Legislation:
Death Tax Repeal Act (H.R. 218 and S. 215)

Issue Brief


MAINTAINING LIFO

Many HARDI members use the Last In-First Out (LIFO) accounting method. This provision has been targeted as a source of revenue by lawmakers to pay for additional spending on various projects. If repealed, companies using LIFO would be forced to report their reserves as income, resulting in a massive incremental tax liability. Additionally, repealing LIFO would mean potentially higher future tax bills and would make it harder for companies to manage inflation.

HARDI participates in the LIFO Coalition to protect LIFO companies from a detrimental tax increase.

LIFO Infographic


Qualified Improvement property fix

When Congress passed the Tax Cuts and Jobs Act in December 2017 it contained a drafting error that would allow building improvements to be immediately expensed as was initially intended. Unfortunately, without this fix many improvements cannot be expensed and now have slower depreciation schedules than before tax reform.

The Restoring Investments in Improvements Act sponsored by U.S. Senators Pat Toomey (R-PA) and Doug Jones (D-AL) and Congressman Jimmy Panetta (D-CA) and Congresswoman Jackie Walorski (R-IN) would fix the drafting error in the Tax Cuts and Jobs Act. HARDI is seeking to add cosponsors to this legislation to help build support for making this common sense fix to the law.