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.
In addition, small construction businesses organized as pass-through entities now face significantly higher combined marginal rates than America’s largest publicly traded corporations, in some cases by as much as 25 percent. In addition to high statutory rates, small businesses, which lack the accounting resources of large corporations, spend three times as much
as big businesses in tax compliance cost.
While the President has called for tax reform, his proposal
only addresses the corporate tax rate and would bypass these small businesses. To address this problem, ABC is a founding member
of the Coalition for Fair Effective Tax Rates and continues to call for comprehensive tax reform that will benefit small business by lowering their tax rates and reducing tax complexity.
“The construction industry has historically paid the highest effective rate of any sector and these additional tax hikes and phase-outs will only exacerbate the burden our members face,” said Associated Builders and Contractors Vice President of Government Affairs Geoff Burr. “Last year’s deal to extend the bulk of the Bush-era tax rates lent needed certainty to many taxpayers, but unfortunately also opened up a wide gap between Main Street and the Fortune 500. We look forward to working with members of Congress to enact comprehensive reform that will provide for fair taxation irrespective of business size, structure or sector.”