In a letter to congressional leaders, IWLA and over 100 other business associations called on Congress to reject the proposed tax increases on America’s family-owned businesses in the Build Back Better Act. The bill’s current framework would expand the 3.8 percent Net Investment Income Tax (NIIT) to all pass-through business income and impose a new surtax of up to 8 percent on all forms of income. While the surtax is advertised as an increase on the wealthiest Americans, current proposals would impose a 5 percent and 8 percent tax on pass-through businesses held in trusts that respectively exceed $200,000 and $500,000 in adjusted gross income.

The Tax Foundation estimates the rate increases in the Build Back Better plan will push marginal tax rates of family businesses making more than $500,000 to over 50 percent. When coupled with state and local taxes, family businesses could face rates as high as 57 percent. Due to the prevalence of trusts, a common feature of succession planning, the higher tax rates could apply to tens of thousands of modestly sized family businesses located across the country.

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