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.”
According to the draft legislation, “the relief provided by reducing tax rates will provide greater incentives for investment and hiring and better wages. The Tax Reform Act of 2014 also provides the certainty that no business—whether a small business or a large corporation—engaged in domestic manufacturing, production, farming, extraction, or construction would be taxed at a rate higher than 20 percent. It is clear that this tax plan is all about making sure that Main Street is, and remains, ‘open for business.’”
Other provisions in the draft legislation create a new payroll tax treatment that will be unfavorable for pass-through entities and dedicate $126.5 billion to the Highway Trust Fund to fully fund highway and infrastructure investment for eight years. In addition, the proposal has been determined by the independent, non-partisan Joint Committee on Taxation to be revenue neutral; however, the committee also projected potential new revenues of $700 billion through economic growth.
To read more about the proposal, read the news release issued by the Ways and Means Committee
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