Main Street businesses should not be penalized for driving America’s economic success. Nor should they be treated as inferior to big businesses when it comes to federal taxation.
President Trump’s “big and beautiful” tax cut from his first term nears expiration. The White House and Congress are working right now to extend the biggest tax cut in U.S. history. But now, in a bizarre twist, a few well-meaning but misguided Republicans are considering pulling the plug one of the most important pillars of those reforms. That’s right: some in the GOP are floating a $200 billion tax hike on the very enterprises that power the dynamism of American communities.
It would be difficult to compose a worse script!
Main Street businesses are the engine of American economic life. They include family-owned shops, construction crews, farms, repair shops, restaurants, manufacturers, and energy producers. These firms struggled through Bidenomics, only to be told now: “Sorry, your taxes are going up.”
Why?
Because Washington operatives keep stepping on rakes when it comes to tax policy.
At the center of this debacle is a little-known but crucial policy Trump put in place after implementing the 2017 tax plan to stop double taxation on businesses. It’s called the Pass-Through Entity Tax deduction, or PTET. Don’t let the clunky acronym fool you—this deduction has made all the difference for Main Street.
Here’s how it works: if you’re a non-publicly traded business structured as an S-corp, LLC, partnership, or sole proprietorship (a “pass-through” entity), you likely pay state income taxes on your business income. Without Trump’s policy, you would have to pay federal income tax on that same income—without being allowed to deduct what you already paid to the state.
That’s double taxation, plain and simple. Trump’s smart PTET fix made it possible for business owners to deduct their state and local taxes when filing their federal return—restoring fairness, since large publicly traded large corporations can already deduct their state income taxes.
Trump’s PTET solution leveled the playing field so Main Street wouldn’t be stuck with a higher effective tax rate, just because of their business structure.
But now, some Republicans want to repeal it to raise revenue in a budget package. Let me translate that into plain English: they want to raise taxes on Main Street to pay for more government.
That’s political suicide—and terrible economics.
Main Street businesses make up more than 90% of all American companies and employ over 65 million workers. They’re not looking for handouts. They just want a level playing field.
Repealing the PTET would favor giant corporations and punish Main Street firms, like the local dry cleaner or family farm.
More broadly, it is clear that the primary problem of the federal budget is a spending problem, and not a revenue one. Given this reality, the GOP majority on Capitol Hill should absolutely not unwind a key element of Trump’s first term economic success.
In addition, if Republicans in Congress repeal this fair treatment of Main Street businesses, they hand a political gift to the Democrats. Into 2026, the Democrat narrative will be: “Republicans raised taxes on American Main Street job creators to pay for their budget deal.”
The American people delivered majorities in both houses of Congress and they deservedly expect results, especially regarding the economy. Now, it is time for Hill GOP leadership to deliver, in concert with President Trump. Doing so will energize Main Street business and also create a political windfall for the Republicans as the party of small enterprise and tax fairness.
Steve Cortes is president of the League of American Workers, a populist right pro-laborer advocacy group, and senior political advisor to Catholic Vote. He is a former senior advisor to President Trump and JD Vance and a former commentator for Fox News.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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