ConDig (21-Dec-17). Construction companies have been handed an early Christmas present by the US government after a comprehensive tax reform bill was passed by Congress, in a move that industry leaders believe will lower tax rates for construction firms.
The Associated General Contractors of America said the bill will lower rates, spur economic growth and impact construction businesses for years to come.
President Trump’s tax bill passed the Senate early Wednesday, which includes a permanent reduction in the corporate tax rate to 21% from 35%. It also features a tax break to owners of pass-through businesses, whose profits are taxed through the individual code.
“Our efforts helped convince members of Congress to ultimately reduce the corporate rate by 14 points; lower individual and pass through rates; double the estate and gift tax exclusion to $11 million; ensure the tax-exempt status of Private Activity Bonds remained untouched; and prevent full repeal of the Historic Tax Credit,” said AGC of America chief executive officer Stephen E. Sandherr.
But he warned that Congress missed an opportunity to address the long-term solvency of the Highway Trust Fund via tax reform.
“We remain focused on ensuring that this administration keeps its promise to rebuild the nation’s infrastructure. And, we are committed to efforts to modernize multiemployer pension plans for the future, among other priorities for the industry.”
President Donald Trump said in November that proposals for a massive infrastructure spending plan remain a priority and should be revealed sometime after Congress passes his plan to overhaul the U.S. tax code.
The Associated Builders and Contractors (ABC) also applauded the passage of the bill and said it was a historic day for the construction industry.
“For too long, ABC’s 21,000-plus members have paid the highest effective tax rate of any sector of the economy. We are a capital-intensive, cash-flow challenged, domestically oriented industry comprised mostly of small, family owned and closely held merit shop construction companies employing hardworking Americans,” said ABC president and CEO Michael D. Bellaman.
“The vast majority of construction companies will benefit from the new 20 percent deduction for qualified pass-through income, bringing the top effective rate to 29.6 percent, down a full ten points. The rest will feel a boost from the largest corporate rate cut in U.S. history. Changes to various accounting methods will ease burdens for many small contractors and the doubling of the estate tax exemption to $11 million is a big win for our industry’s family businesses.”
Goldman Sachs raised its outlook growth to 2.5 percent from 2.4 percent for the U.S. economy next year in a recent research note, with the investment bank also lowered its unemployment forecast to 3.7 percent.