OVERVIEW

More than a quarter century after its last significant reform, our nation’s tax system is creaking under its own weight. The sweeping changes of 1986 have been eroded over time by tens of thousands of pages of new regulations, loopholes and preferences. In its current form, the internal revenue code disproportionately affects small businesses, which are forced to expend significant time and resources in order to comply with increasingly burdensome tax provisions. Moreover, Congress impedes economic growth with unpredictable, ad hoc tax policies extended on a year-to-year basis.

With a litany of tax rates scheduled to rise sharply on everything from income to investments to inheritance, Congress must act immediately to forestall the looming “fiscal cliff” at the end of 2012. The overwhelming majority of construction businesses pay income taxes at the individual level and would be adversely affected by a failure to extend the current individual tax rates. This extension should be used as an opportunity to pursue fundamental, comprehensive reform in a way that keeps rates low and similar for corporations and individuals alike.

As the United States struggles to emerge from a deep recession, the last thing the country can afford is to raise taxes on small businesses, the primary engine of job creation. Further, long-term tax policy will establish an encouraging climate for capital investment and economic growth. ABC supports minimizing the overall tax burden while reducing complexity and providing needed certainty to the construction industry and the broader business community.

ABC SUPPORTS

  • Extension of ALL current tax rates as a pathway to comprehensive reform.
  • Making permanent the 15 percent Capital Gains tax rate.
  • Repeal of the Estate Tax (“death tax”).
  • Repeal of the individual and corporate Alternative Minimum Tax (AMT). 
  • Increasing and indexing the Completed Contract Method (CCM) threshold.
  • Repeal of look-back accounting requirements.
  • Reform of depreciation schedules to reflect the useful life of capital investments.
  • Making permanent worthy business tax credits and deductions (“extenders”).

ABC OPPOSES

  • The expiration of current tax policies on Dec. 31, 2012, which will result in: individual rates increasing across the board, resulting in a 39.6 percent top bracket; capital gains rising from 15 to 20 percent; and the Estate tax jumping to 55 percent with a severely diminished $1 million exemption.
  • Implementation of the Patient Protection and Affordable Care Act taxes on wages and investment income in 2013.