WASHINGTON, D.C., Dec. 3
– Associated Builders and Contractors (ABC) member Rich Shavell, CPA, CVA, CCIFP, today told a U.S. House of Representatives subcommittee that small businesses need relief from onerous tax policies and a growing regulatory burden in order to succeed and create jobs. Shavell testified before the Subcommittee on Economic Growth, Tax and Capital Access at a hearing titled “Tax Extenders and Small Businesses as Employers of Choice
“The single biggest challenge facing small business today is widespread uncertainty—uncertain economic prospects, an uncertain regulatory environment, and uncertain tax policy,” said Shavell, president of Shavell & Company, P.A., Boca Raton, Fla. “Congress must do its job and pass tax legislation to stabilize the tax environment. The continual expiration of effective dates for tax incentives and other tax provisions included in the annual extenders bill hurts the business community and particularly the small businesses.”
Construction contractors pay the highest effective tax rate—the percent of income actually paid in taxes—of any sector in the country, according to U.S. Department of Treasury analysis
“As the year end approaches, the small business owner must project their 2015 taxes both with and without these tax provisions,” Shavell said. “They are left with a terrible choice: pay in more taxes based on these laws not being effective or take the chance that the law will be passed. This is no way to do business, and the cash flow impact can limit expansion plans, force contraction, affect hiring decisions and even employee benefits that may or may no longer be available to employees.”
In his testimony Shavell also highlighted ABC's ongoing efforts to relieve an onerous compliance burden contractors were saddled with as an unintended consequence of past tax reform. In 1986 Congress eliminated the use of the Completed Contract Method of accounting (CCM), the preferred method for most construction businesses. This change forced contractors to waste countless hours and dollars on "look-back" calculations for long-term contracts, highlighting the importance of well-crafted underlying policy to go along with tax certainty.
Shavell urged members of the committee to provide urgent relief to small contractors by adopting three key provisions:
Updating the small contractor threshold in section 460(e) from $10 million to $40 million
Indexing the threshold going forward
Eliminating the Section 56(a)(3) add-back requirement for Alternative Minimum Tax (AMT) purposes
Chavell has been an active member of ABC for more than 25 years and is a past chair of ABC Florida East Coast Chapter’s Legislative Committee and of ABC’s Tax Advisory Group.
Read the full testimony
or watch the video of the hearing on the House Small Business Committee’s website