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The overwhelming majority of construction businesses are organized as pass-through entities, meaning that their income is taxed at the individual level. These job-creating small and medium-sized businesses would bear the brunt of higher marginal tax rates, wealth surcharges, and corporate-only attempts to reform or alter the code.

Small Business Tax Relief

The overwhelming majority of construction businesses are organized as pass-through entities, meaning that their income is taxed at the individual level. These job-creating small and medium-sized businesses would bear the brunt of higher marginal tax rates, wealth surcharges, and corporate-only attempts to reform the code.

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Tax Season Reminds Construction Industry of High Effective Rates

Many ABC members were greeted with a significant tax increase this tax day, April 15. Construction contractors who survived the recession already paid the highest effective tax rate of any sector, and now they face even higher taxes thanks to rising marginal rates, reinstated limits on deductions, and new surtaxes on wages and income stemming from the health care law.

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Tax Proposal Would Lower Construction Tax Rate to 25 Percent

U.S. House of Representatives Ways and Means Committee Chairman Dave Camp (R-MI) Feb. 26 released a draft of legislation designed to reform the tax code that proposes lowering the top tax rate for construction businesses from 35 percent and 39.6 percent to 25 percent, regardless of entity-level structure. The proposal confirms that the 25 percent Qualified Domestic Manufacturing Income (QDMI) rate would apply to “construction of real property in the United States as part of the active conduct of a construction trade or business.”

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Study Finds Corporate-Only Tax Reform Could Hurt Small Businesses

A study completed by the Small Business Administration (SBA) found that corporate-only tax reform might cause many small businesses that file as pass-through entities to suffer the consequences of this one-sided solution. 

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The American Job Builders Tax Reform Act

Under current law, construction contractors cannot use the completed contract method (CCM) of accounting if average annual gross receipts exceed $10 million, which has not been adjusted for inflation since 1986. H.R. 1993 would increase the threshold to $40 million and would index the threshold for inflation. Adjusting this threshold for inflation would allow more than 90 percent of ABC members that are small businesses to utilize CCM.

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Estate Tax Repeal

When the owner of a construction company dies, the value of the company is added to the owner’s estate and is taxed after exemptions. The estate tax, also known as the “death tax,” places a significant burden on future generations of family business owners, as well as their employees, customers and suppliers.

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ABC and Coalition Support Bill to Repeal the Death Tax

ABC, as part of the Family Business Estate Tax Coalition (FBETC), June 19 supported the Death Tax Repeal Act of 2013 (S. 1183/H.R. 2429) that would permanently repeal the estate tax.

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ABC and Coalition Call on Congress to Stop Scheduled Estate Tax Hike

As part of the Family Business Estate Tax coalition (FBETC), ABC Nov. 15 sent a letter to members of Congress urging them to pass legislation addressing the estate tax before the end of the year. Barring congressional intervention, the resurgent estate tax rate and diminished exemption would saddle thousands of family-owned businesses with a crippling tax increase.

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February Updated Summary of Employer Requirements Contained in PPACA

An updated summary of employer requirements under the Patient Protection and Affordable Care Act (PPACA) is available for ABC members in a reference document provided by Washington Council Ernst & Young. The document is available on the health care law employer tool kit (login required) on ABC’s website.

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Health Care Employer Mandate Tax Penalties Delayed Until 2015

For more than three years, ABC has advocated for the repeal of the complex and costly employer mandate included in the Affordable Care Act. On July 2, the Obama Administration finally acknowledged employers’ concerns about implementing the burdensome requirements in a timely and effective manner. 

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Groups Continue to Support Bill to Repeal Health Insurance Tax

The Stop the HIT Coalition, of which ABC is a member, March 19 sent a letter to members of the U.S. Senate offering support for the Jobs and Premium Protection Act of 2013, introduced by Sen. John Barrasso and Sen. Orrin Hatch, that would repeal the health insurance tax provisions in the Patient Protection and Affordable Care Act. 

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Legislation Seeks to Repeal IC "Safe Harbor Provision"

In the 111th Congress, Representative Jim McDermott D-WA) introduced the Taxpayer Responsibility, Accountability, and Consistency Act of 2009 (H.R. 3408) and Senator John Kerry (D-MA) introduced the Senate companion bill, S. 2882. Both H.R. 3408/S. 2882 seeks to repeal Section 530 of the Revenue Act of 1978, a safe-harbor provision that protects qualifying taxpayers against the Internal Revenue Service reclassifying covered workers as employees for federal employment tax purposes.

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Independent Contractor Reform

ABC supports preservation of Section 530. Attempts to repeal it will place uncertainty and new overhead in front of entrepreneurship, with the heaviest burdens falling on the low-capital start-ups from which many successful small businesses originate.

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1099 Reporting Requirement

In a victory for merit shop construction and businesses nationwide, the expanded 1099 tax reporting requirements included in  the Patient Protection and Affordable Care Act were repealed April 14 when President Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (H.R. 4).

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Three Percent Witholding

In November of 2011, Congress unanimously passed ABC-supported legislation to repeal Section 511 and its withholding mandate, culminating five years of hard work by ABC and its coalition partners.

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