Politics and Policy
On Aug. 5 the U.S. Department of the Treasury issued proposed regulations targeting the valuation practices of family-owned businesses. The proposed rules would lead to dramatically higher estate and gift taxes by eliminating the use of discounts currently permitted to reflect lack of control and marketability, respectively. The Wall Street Journal has referred to it as a "stealth death tax increase" that "rewrites long-standing interpretations of law."
New analysis from the U.S. Department of the Treasury shows that the construction industry pays the highest effective tax rate—the percent of income businesses actually pay in taxes—of any sector of the economy. According to the report, the typical construction company faces an average effective federal tax burden of 30.3 percent, well above the 23.3 percent average for all US businesses.
On April 12, ABC joined more than 60 national and multi-state organizations across the country in sending a letter to members of the House Committee on Ways and Means urging them to take action on the Small Business Healthcare Relief Act (H.R. 2911 ). The bill would allow small businesses that have fewer than 50 employees to offer employer payment plans and Health Reimbursement Arrangements (HRAs) to employees for the payment of premiums or qualified medical expenses associated with insurance coverage.
The U.S. House of Representatives and U.S. Senate have reached a deal on both the Omnibus spending package and extending certain expired tax provisions commonly referred to as “extenders.”
On April 22, 218 members of the House officially signed onto legislation (H.R. 928) that seeks to repeal the health insurance tax (HIT). The HIT is a measure of the Affordable Care Act (ACA) that increases premiums for coverage from the fully insured market, where almost 90 percent of small businesses purchase health coverage.
On Feb. 13, Rep. Charles Boustany (R-La.) and Rep. Kyrsten Sinema (D-Ariz.) introduced the Jobs and Premium Protection Act (H.R. 928), which would fully repeal the health insurance tax (HIT) provision in the Affordable Care Act (ACA). The ABC-supported coalition, Stop the HIT, sent a letter commending Boustany and Sinema for coming together to repeal the burdensome tax.
The United States Senate passed a one-year “extenders” bill Dec. 16, retroactively renewing 55 previously expired tax credits and other key policies for the 2014 tax year. The 76-16 Senate vote echoes the overwhelming 378-46 House approval earlier in the month and sends the bill to the President’s desk where the White House signaled he will sign it into law. ABC recently joinedmore than 500 industry groups in urging the swift passage of such legislation.
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.
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.”
The nation's highest tax court decided last week a contentious construction accounting case in favor of the taxpayer, a California homebuilder, that had been in a decade-long dispute with the IRS over the use of the completed contract method (CCM). While in this case the builder is a residential developer, the precedent may have a broader impact for the tax treatment of long-term construction contracts.