Democratic presidential candidates take aim at a tax break for small businesses

Democratic presidential candidates are taking aim at a new tax break for small businesses. Billionaire Michael Bloomberg last week pitched a $5 trillion tax plan that would raise levies on wealthy individuals and corporations. He also wants to repeal the 20% qualified business income deduction, a feature of the Tax Cuts and Jobs Act, which went into effect in 2018. This write-off permits owners of “pass-through” entities, including S-corporations and partnerships, to deduct up to 20% of their qualified business income. The so-called QBI deduction was intended to bring S-corp tax rates into parity with the reduced rates on C-corporations, said Garrett Watson, senior policy analyst at the Tax Foundation. The 2018 tax overhaul lowered income tax rates on C-corps from 35% to 21%.