H.R. 116House115th Congress (2017-2019)In Committee

Main Street Fairness Act

Introduced January 3, 2017

AI-Generated Summary

Updated April 15, 2026 at 10:56 AM UTC

The Main Street Fairness Act would change the tax code so that income from pass‑through businesses – like partnerships, S corporations, sole proprietorships, and certain trusts – is taxed at the same maximum rate that applies to corporations. The goal is to prevent owners of these businesses from paying a higher tax rate than corporate shareholders.

Key Provisions

  • Adds a new rule that qualified business income (QBI) from pass‑through entities is taxed at the corporate maximum rate, using a formula that limits the tax to not exceed that rate.
  • Defines “qualified business income” as all income, deductions, losses, or credits from an active trade or business attributable to the owner’s interest in a partnership, S corporation, sole proprietorship, or trust/estate.
  • Excludes financial‑services income earned by partners from the QBI definition.
  • Applies the new tax treatment only in years when the corporate top tax rate is higher than the individual top rate.
  • Effective for taxable years beginning after the law is enacted.

Legislative Activity

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1 earlier action
HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

January 3, 2017

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HouseIntro Referral

Introduced in House

January 3, 2017

HouseIntro Referral

Referred to the House Committee on Ways and Means.

January 3, 2017

Floor Debate

3 members

What members said about H.R. 116 on the floor

1 Republican2 Democrats
James P. McGovern
Rep. James P. McGovernD-MA-2 · Feb 14, 2017

Mr. Speaker, I yield myself such time as I may consume. (Mr. McGOVERN asked and was given permission to revise and extend his remarks.) Mr. Speaker, I thank the gentleman from Alabama (Mr. Byrne) for…

Bradley Byrne
Rep. Bradley ByrneR-AL-1 · Feb 14, 2017

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 116 and ask for its immediate consideration. Mr. Speaker, for the purpose of debate only, I yield the customary 30…

Eric Swalwell
Rep. Eric SwalwellD-CA-15 · Feb 14, 2017

Mr. Speaker, I thank Mr. McGovern for his work on this issue. I love my country, and I don't doubt that every one of my colleagues in this Chamber also loves this country. I admire every man and…

Bill Text

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Introduced in HouseIssued January 3, 2017

I

115th CONGRESS

1st Session

H. R. 116

IN THE HOUSE OF REPRESENTATIVES

January 3, 2017

Mr. Buchanan introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to ensure that pass-through businesses do not pay tax at a higher rate than corporations.

1.

Short title

This Act may be cited as the Main Street Fairness Act.

2.

Business income of pass-through entities and individuals

(a)

Qualified business income taxed at corporate rate

Section 1 of the Internal Revenue Code of 1986 is amended by redesignating subsection (i) as subjection (j) and by inserting after subsection (h) the following:

(i)

Qualified business income

(1)

In general

If a taxpayer has qualified business income for any taxable year, the tax imposed by this section for such taxable year shall not exceed the sum of—

(A)

a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of—

(i)

taxable income reduced by the sum of net capital gain plus qualified business income, or

(ii)

the amount determined under clause (i) plus so much of qualified business income that, when added together, would not be taxed at a rate greater than the maximum rate in effect under section 11(b),

(B)

tax on qualified business income reduced by the amount of qualified business income on which a tax is determined under subparagraph (A) (if any), determined under section 11 for the taxable year by treating qualified business income as taxable income of a corporation, plus

(C)

a tax on net capital gain, computed as if subsection (h) imposed a tax on net capital gain.

(2)

Qualified business income defined

For purposes of this subsection—

(A)

Qualified business income

The term qualified business income means all items of income, deduction, loss, or credit properly attributable to the taxpayer from the active conduct of a trade or business in which—

(i)

in the case of a partnership, the taxpayer holds a capital or profits interest,

(ii)

in the case of an S corporation, the taxpayer is a shareholder,

(iii)

in the case of a sole proprietorship or an entity otherwise disregarded as separate from its sole owner, the taxpayer is the sole owner, and

(iv)

in the case of a trust or estate, the taxpayer is a beneficiary.

(B)

Net capital gain

Such term shall not include any item taken into account in determining net capital gain.

(C)

Exception for financial services income of partnerships

In the case of a taxpayer who holds a capital or profits interest in a partnership, such term does not include financial services income (as defined in section 904(d)(2)(D)).

(3)

Limitation

Paragraph (1) shall only apply to a taxable year in which the maximum rate of tax under this section exceeds the maximum rate of tax under section 11.

(4)

Net capital gain

For purposes of this subsection, the term net capital gain has the meaning given to such term by subsection (h).

(5)

Regulations

The Secretary shall issue such regulations or other guidance as may be necessary to carry out the purposes of this subsection.

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.