May 5, 2025
The Honorable Scott Bessent
Secretary
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington DC. 20220
Kevin Hassett
Director
National Economic Council
1600 Pennsylvania Avenue, NW
Washington DC 20500
The Honorable John Thune (R-SD)
Senate Majority Leader
United States Senate
Washington DC 20510
The Honorable Mike Crapo (R-ID)
Chairman Senate Finance
United States Senate
Washington DC 20510
The Honorable Mike Johnson (R-LA)
Speaker of the House
U.S. House of Representatives
Washington DC. 20515
The Honorable Jason Smith (R-MO)
Chairman, House Ways and Means Committee
U.S. House of Representatives
Washington DC 20515
We write today in opposition to any limits on the ability of businesses to deduct state and local taxes paid, unless offset dollar for dollar by new, broad-based, and permanent pro-growth tax reforms.
The ability of businesses to deduct state and local taxes paid on their profits is a longstanding “ordinary and necessary expense” embedded in the U.S. tax code. Corporations have been able to deduct state corporate income tax paid for as long as such taxes have existed. “Pass through” entities like Subchapter-S companies, partnerships, etc. were confirmed in their ability to deduct state and local profit taxes paid at the entity level in the 2017 “Tax Cuts and Jobs Act.” And businesses have always been able to deduct all other state and local taxes, such as property taxes and severance/extraction taxes.
The challenges businesses face in the current economic environment means that tax hikes on them should be avoided. Tariffs, wild stock and bond market swings, and widespread predictions of a recession mean that now is the wrong time to raise taxes on businesses.
President Trump and the Congressional Republican majority did not run on business tax increases. In fact, the GOP trifecta was achieved with the opposite promise–to stop tax increases across the board, and to make the Trump tax cuts permanent. Eliminating longstanding, ordinary and necessary business deductions raises average effective income tax rates.
Business taxes paid on business profits are fundamentally different from the individual SALT cap debate. Businesses deduct costs incurred for all ordinary and necessary expenses–rent, salaries, equipment, and state and local taxes. This has nothing to do with how much personal income tax, sales tax, and property tax an individual or family gets to deduct on their tax return. The two issues are only loosely connected because income taxes on businesses are apportioned based on where transactions take place, not where businesses are located.
It’s vitally important that all the provisions of the 2017 Tax Cuts and Jobs Act be made permanent. We look forward to working with you in the coming weeks to enact permanent, pro-growth tax reforms for American families and employers.
Sincerely,
Ryan Ellis
Center for a Free Economy
Kent Kaiser
Trade Alliance to Promote Prosperity
Patrick M. Brenner
Southwest Public Policy Institute
David Wallace
Fair Energy
Tom Giovanetti
Institute for Policy Innovation
James Davis
Fans for Fair Play
Paul Gessing
Rio Grande Foundation
Terry Neese
National Grassroots Network
Casey Givens
Young Voices
J.W. Delano
Southeast Texans for Liberty
S Corporation Association
National Ready Mixed Concrete Association
The Association for Hose and Accessories Distribution
Air Conditioning Contractors of America
National Roofing Contractors Association
National Wooden Pallet & Container Association
Hartz Mountain Industries
National Association of Convenience Stores
Saulius “Saul” Anuzis
American Association of Senior Citizens
Colonel Rob Maness
Gator PAC
The Sheet Metal and Air Conditioning Contractors National Association
Glass Packaging Institute
Air Conditioning Contractors for America
National Tooling and Machining Association
Precision Metalforming Association
Performance Racing Industry
Charles Sauer
Market Institute
John Goodman
Goodman Institute
Susan Carleson
Carleson Center for Welfare Reform
Jeff Cargerman
Inventors Project
George Landrith
Frontiers of Freedom
Norm Singleton
US Policy
Jeffrey Mazzella
Center for Individual Freedom
C. Preston Noell III
Tradition, Family, Property, Inc.
Ryan McGowan
Institute for Legislative Analysis
Larry Ward
Constitutional Rights PAC
Palmer Schoening
Family Business Coalition
Associated Equipment Distributors
National Lumber & Building Material Dealers Association
American Subcontractors Association
Small Business & Entrepreneurship Council
Forest Resources Association
National Association of Insurance and Financial Advisors
North American Association of Food Equipment Manufacturers
James L. Martin
60 Plus Association
Chadwick Hagan
Founding Principles PAC
International Foodservice Distributors Association
Jim Pfaff
Conservative Caucus
Water and Sewer Distributors of American
North American of Food Equipment Manufacturers
Precision Machined Products Association
Pete Sepp
National Taxpayers Union
Patrice Onwuka
Independent Women’s Voice
Jim Edwards
Conservatives for Property Rights
Andrew Langer
Institute for Liberty
Gabriel Llanes
Legacy of Liberty PAC
Bartlett Cleland, Innovation Economy Alliance
Kevin Kearns
US Business and Industry Council
Julio Rivera
Reactionary Times
Autry Pruitt
New Journey PAC
Matthew Kandrach
Case for Consumers
Angie Wong
Capitol Hill Fight Club PAC
Independent Electrical Contractors
Energy Marketers of America
Leading Builders of America
National Association of Professional Insurance Agents
Specialty Equipment Market Association
National Council of Farmer Cooperatives
National Propane Gas Association
Ralph Benko
Capitalist League
Structural Insulated Panel Association (SIPA)
Wholesale Florist and Floral Supplier Association
Irrigation Association
National Utility Contractors Association
National Retail Federation
FCA International