GOP Lawmakers Call for Trust Shareholder Tax Relief

December 6, 2017

The Honorable Mitch McConnell
Majority Leader
United States Senate
Washington, DC 20510

Chairman Orrin Hatch
219 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Paul Ryan
Speaker
United States House of Representatives
Washington, DC 20515

Chairman Kevin Brady
1102 Longworth House Office Building
Washington, DC 20515

Dear Leader McConnell, Speaker Ryan, Chairman Hatch, and Chairman Brady:

We share your deep commitment to boosting economic growth and creating an environment that allows for America's businesses to both create and retain jobs here on our shores. A key driver of robust and sustained economic opportunity along Main Street and in communities throughout this great country, as you know, lies with American small and family-owned businesses.

It is with these businesses in mind, and the millions of Americans that they employ, that we express our concern regarding the Senate-passed tax bill treatment of pass-through entities that are structured with trust shareholders. We strongly urge you to address this provision during the conference process and create a system where all small and family-owned American businesses can continue to thrive within their current structure.

Throughout this process, you have spoken extensively of creating tax rates that are lower, simpler, and fairer. We ask for no less. The Senate-passed tax reform bill contains a provision that excludes trust shareholders from using the 23 percent pass-through deduction, creating a system that arbitrarily favors one business over another.

Businesses structured as pass-through entities employ more than 50 percent of the private sector workforce and face a wide range of needs as multiple generations of family members share in leadership and day-to-day operations. Without access to the pass-through rate, small and family-owned businesses with shares held in trusts would face a tax treatment that puts them at a significant disadvantage compared to their counterparts. Two businesses operating in the same industry, on the same street somewhere in America would be treated differently simply because one is structured under a trust — this is contradictory to the intended goals of tax reform.

If the Senate provision is included in the final conference report, small and family-owned businesses in industries varying from wholesalers and manufacturers to farmers and contractors will not be eligible for this deduction. This is not a small issue.

We urge that in the course of conference deliberations on the Tax Cuts and Jobs Act, you ensure that all small and family-owned businesses are treated in the same manner under the new, fairer tax code — regardless of whether they are structured under a trust.

Sincerely,

James M. Inhofe
United States Senator

James Lankford
United States Senator

Roy Blunt
United States Senator

Tom Cole
Member of Congress

Steve Daines
United States Senator

Frank D. Lucas
Member of Congress

Ron Johnson
United States Senator

Markwayne Mullin
Member of Congress

Jim Bridenstine
Member of Congress

Steve Russell
Member of Congress

Buddy Carter
Member of Congress

Lamar Smith
Member of Congress

Scott Tipton
Member of Congress