Â鶹ÊÓƵ Supports Tax Policies that Promote Business Investment, Development, and Expansion
For contractors, high income taxes— whether corporate or individual—reduce a company’s cash flow, thereby reducing the amount of money available to these businesses to expand, purchase equipment, hire more workers, bid on future projects, and reduce debt. Â鶹ÊÓƵ supports keeping the federal tax burden on individuals, construction companies, and other businesses low as a means of promoting investment, business development, and business expansion. High marginal and effective tax rates inhibit entrepreneurial activity by penalizing successful businesses.
Prior to passage of the Tax Cuts and Jobs Act (TCJA), the construction industry faced the highest effective tax rate of any industry, at 31 percent, according to a 2016 study from the Department of the Treasury, Office of Tax Analysis. While the Tax Cuts and Jobs Act reduced tax rates for construction businesses, the industry continues to pay a high effective tax rate relative to other industries; any changes to the tax rates disproportionately affects construction firms.
Â鶹ÊÓƵ supported passage of the TCJA and One Big Beautiful Bill Act(OBBBA). The bills reduced tax rates for corporations and pass-through businesses, simplified tax accounting for construction businesses, repealed the corporate alternative minimum tax (AMT) and significantly reduced the impact of the individual AMT.
The majority of construction firms (more than 70 percent) are organized as pass-through businesses, such as S-Corporations, partnerships, LLC’s and sole proprietorships, meaning they do not pay the corporate tax rate, and are instead taxed at the owners’ individual tax rate.
The tax code includes a number of provisions that promote infrastructure investment and construction jobs, which Â鶹ÊÓƵ strongly supports.
Â鶹ÊÓƵ Message
Â鶹ÊÓƵ supported passage of the TCJA and OBBBA. While the bills improved the tax code in many important ways, the construction industry needs additional changes. The following remain top Â鶹ÊÓƵ legislative priorities.
Repeal the Alternative Minimum Tax (AMT). The AMT creates needless complexity and is a stealth tax increase on many construction businesses.
Repeal the Estate Tax. The TCJA increased the estate tax exemption from $5 million to $10 million and OBBBA increased it to $15 million permanently. While Â鶹ÊÓƵ supports making this important estate tax relief permanent, a better outcome would be full repeal of the estate tax, which can force family-owned businesses to divert scarce resources and capital away from the business and into expensive estate planning.
Promote Infrastructure Investment in the Tax Code. Â鶹ÊÓƵ supports the expansion of the private-activity bond (PAB) cap to allow for additional investment in highways and utilities, and also include additional types of public infrastructure, such as public buildings like schools, hospitals and courthouses.
