Family-owned businesses—including grocery stores, craft shops and small manufacturers—are worried tax legislation in Congress could leave them at a disadvantage to big corporations and other competitors, The Wall Street Journal reports.
At issue for these businesses is their structure as trusts, which owners establish to preserve an enterprise for succeeding generations, protect against estate taxes or a divorcing spouse as well as other claimants who might try to seize a stake in the company.
Some family-owned firms say the Senate version of the tax bill holds risks for them because it excludes trusts from a new tax deduction. Family-owned businesses are a slice of the universe of “pass through” companies—partnerships, limited liability companies and S Corporations—that pay taxes through individual rather than corporate returns.
Tax writers in the Senate crafted the bill in a way that prevents trusts and estates that operate businesses from reaping the benefits of new low business tax rates. Republican tax writers haven’t explained their motives, but the move could save billions.
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