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Democrats and Policy Analysts Tell House: Pass-Through Deduction Skews to Wealthy; Tariffs and Premium Hikes Eat Small-Business Gains
Summary
During the April 15 hearing, Democrats and a Center for American Progress analyst said data show the pass-through deduction mainly benefits higher-income filers and that tariffs and the loss of enhanced premium tax credits have raised costs for many small businesses, potentially offsetting tax gains.
A central strain of testimony at the House Small Business Committee hearing focused on the distributional effects of the pass-through deduction and the real-world offsets that critics say blunt its benefits.
Ranking Member Velázquez told the panel the pass-through component of the Working Families Tax Cuts Act ‘‘costs nearly $736 billion over the next 10 years’’ and argued the top 1% receives a disproportionate share of benefits. "For most middle-class small business owners, that premium increase alone wipes out the entire benefit of the pass-through deduction,"…
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