Senate Finance Committee Chair Ron Wyden, D-Ore., said he is will seek to add to Democratic tax increase legislation a phase out of the Section 199A deduction for individuals with income exceeding $400,000.
The fate of Section 199A remains a major point of contention in Democratic tax deliberations. President Joe Biden did not target it in any of his “green book” tax increase proposals, but many congressional Democrats have repeatedly criticized it. Limiting it could provide an additional source of revenue to cover other Democratic priorities, but moderate Democrats are sympathetic to the private companies that use it. The effort to preserve it will also likely be fierce from many business groups, but the administration may be open to adding a limit. Kimberly Clausing, deputy assistant Treasury secretary for Tax Analysis, noted she “wouldn’t read much into the absence” of a proposal on Section 199A in Biden’s platform.
Wyden is seeking to phase out the deduction between business income levels of $400,000 and $500,000, but to expand it below those thresholds to make it available for specified service trades or businesses.
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