On April 8, the U.S. Senate Committee on Small Business and Entrepreneurship and the U.S. House Committee on Small Business held a joint hearing titled, “Prosperity on Main Street: Keeping Taxes Low for Small Businesses.” Ahead of the hearing, ABC sent a letter to the committees in support of key provisions from the Tax Cuts and Jobs Act that provided important tax relief for contractors. Specifically, ABC called on House and Senate members to support critical tax policies, such as:

• Maintaining Parity for Pass-Through Entities through the permanence of the TCJA’s Section 199A
• Revived Expensing of Research and Development Costs
• Restoration of 100% Bonus Depreciation

The scheduled expiration of many of these policies would have grave effects, not only for our contractor members, but for the construction market more broadly, specifically harming small businesses around the country. On Jan. 17, ABC sent a letter to the House Ways & Means Committee emphasizing the significance of making permanent the provisions of the TCJA for America’s working families.

On March 24, ABC joined over 300 other trade associations in a letter urging the Office of the U.S. Trade Representative to refrain from imposing its proposed actions in response to the Section 301 investigation of China’s targeting the maritime, logistics, and shipbuilding sectors for dominance.

“We support scrutiny of China’s efforts to dominate the maritime industry,” the letter reads. However, USTR’s proposed actions will not deter China’s broader maritime ambitions and will instead directly hurt American businesses and consumers. Specifically, USTR’s proposed fees will increase shipping costs, container and non-containerized, by at least 25% ($600-$800 or more), adding approximately $30 billion in annual costs on U.S. businesses and farmers.”

The letter went on to acknowledge the intended goal of supporting a domestic shipbuilding industry but explained that the proposed export requirements would force a reduction in U.S. exports, contrary to the Trump Administration’s America First trade goals.

On Jan. 17, the U.S. House of Representatives Committee on Ways & Means held a hearing focused on the family and business provisions included in the Tax Cuts and Jobs Act. Ahead of the hearing, ABC sent a letter to the committee emphasizing the significance of making permanent the provisions of the TCJA for America’s working families.

In the letter, ABC urged the committee to support the following critical tax policies, which are vital to the continued success and economic prosperity of our industry:

• Maintaining parity for pass-through entities (TCJA Section 199A)
• Continuation of TCJA estate tax treatment
• Revived expensing of R&D costs
• Restoration of 100% bonus depreciation
• Opposition to exclusionary labor mandates in IRA green tax credits

In the hearing, there was increased focus on addressing the looming expiration of the Section 199A deduction, which, if allowed to expire, would result in a 20% increased tax on pass-throughs, while C-corps and publicly traded companies will continue to enjoy their lower, 21% permanent rate.

For more information on the hearing, see ABC Newsline.

On Sept. 11, the U.S. House Committee on Ways & Means held a markup of the ABC-supported H.R. 9461, the USA Workforce Investment Act.

By establishing a new federal tax credit encouraging donations for community-based apprenticeship, career and technical education, workforce development and educational preparedness programs, Rep. Lloyd Smucker’s USA Workforce Investment Act will help address the skilled worker shortage and grow the construction talent pool.

On July 31, ABC submitted a letter in support of the cloture motion for the motion to proceed to H.R.7024, the American Families and Workers Act. This legislation, introduced by Rep. Jason Smith, R-Mo., extends vital tax provisions of the Tax Cuts and Jobs Act, including the deduction for research and development and the extension of the 100% bonus depreciation. Notably, this legislation maintains provisions that allow for immediate R&D expensing, which provides for lower tax bills, less paperwork and easier compliance for contractors. In addition, the legislation extends the 100% bonus depreciation that allows construction businesses to expense or write off the purchase of tools, equipment and machinery during the year of purchase.

ABC awaits the Senate's vote on the motion to proceed to H.R.7084. While the Tax Relief for American Families and Workers Act passed the House with bipartisan support on January 31 with a 357-70 vote, Republicans in the Senate have said that they will vote the measure down, which takes 60 voters to pass, as they anticipate having the majority next year and thus hold more negotiating power when it comes to Tax Policy.

On Jan. 19, the House Ways and Means Committee, held a markup of the bipartisan, bicameral tax proposal to extend key tax proposals, negotiated by Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Jason Smith, R-Mo. The Committee passed the bill by a bipartisan vote of 40-3, with the panel’s top Democrat, Rep. Richie Neal, D-Mass., supporting the bill, indicating that Democratic House leaders will likely follow his lead.

ABC provided a letter of support for the proposal, but also expressed concerns with the bill’s provisions that end the COVID-related Employee Retention Tax Credit on January 31, 2024, and implement new penalties for taxpayers and preparers. While the program has been heavily criticized for its excessive costs and fraudulent claims, ABC urged the committee to ensure those acting in good faith do not face undue penalties. Sen. Wyden and Rep. Smith aim to pass the tax package before Jan. 29 to avoid disruptions to filing season.

Key to ABC members and the construction industry are the bill’s provisions to expand innovation and competitiveness with pro-growth economic policies that include:

• Research & Development (R&D) expensing so businesses of all sizes can immediately deduct the cost of their U.S. R&D investments instead of over 5 years – supporting innovation and growth here at home.
• Interest deductibility to help small- and medium-sized businesses meet payroll and grow – particularly at a time of high interest rates.
• 100% expensing for business investment in U.S. facilities, equipment, and machines
• Increase in the maximum amount a taxpayer may expense from $1 million to $1.29 million for property placed in service starting in 2024

The Committee’s press release can be found here, markup documents here, and a section-by-section here.

On Dec. 5, ABC sent a letter to Speaker Mike Johnson highlighting the critical provisions of the Tax Cuts and Jobs Act set to expire in 2024. ABC specifically called for extending or making permanent the 20 percent qualified business income deduction for pass through businesses, individual rates, and estate tax exemption provisions included in the TCJA. ABC’s letter also backs efforts of U.S. House Ways and Means Committee Chairman Jason Smith, R-Mo., and a call from nearly 150 House Republicans to strike a deal on critical tax extenders for U.S. businesses and employers.

With only two years left until key provisions of the TCJA sunset, ABC is working to preserve these provisions and ensure that lower tax rates and parity for main street businesses with larger corporations allow the economy to thrive, businesses to grow, and provide more Americans with job opportunities. ABC also continues to push for an end of year tax extenders deal, particularly the extension of the R&D tax credit.

On September 13, ABC submitted comments to the House Oversight and Accountability Subcommittee on Health Care and Financial Services hearing titled, “The Inflation Reduction Act: A Year in Review.” ABC’s letter expressed our concerns about anti-competitive and inflationary policy in the IRA that grants developers of clean energy construction projects a bonus tax credit 500% greater than a baseline tax credit of 6% conditioned on satisfying controversial prevailing wage and government-registered apprenticeship requirements.

With the Corporate Transparency Act’s new reporting requirements set to take effect beginning January 1, ABC joined a letter signed by more than 80 trade associations calling on Congress to enact the Protecting Small Business Information Act of 2023 (H.R. 4035). Authored by House Financial Services Committee Chairman Patrick McHenry, the legislation would delay implementation of the CTA until Treasury finishes the necessary rulemaking process, giving affected businesses much-needed relief from the poorly conceived and drafted rules.

The CTA will subject tens of millions of small businesses and other entities to increased paperwork, compliance costs, privacy risks, substantial fines, and even jail.

Congressman Lloyd Smucker, R-Pa., introduced the Main Street Tax Certainty Act, H.R. 4721, legislation which would permanently extend Section 199A of the Internal Revenue Code, which is slated to expire in 2025. Smucker’s bipartisan legislation is cosponsored by 99 Members, including two Democrats, and is supported by all Republican Members of the Ways & Means Committee.

Section 199A, which was adopted as part of the landmark 2017 Tax Cuts and Jobs Act, allows for a 20 percent deduction of qualified income for pass-through businesses. Most small business are structured as a pass-through and this section was included in the Tax Cuts and Jobs Act to promote equity in America’s tax code between small businesses on main street with larger corporations.

ABC joined over 160 organizations in support of the legislation, and also supported mirror legislation in the Senate introduced by Sen. Steve Daines, R-Mont. Earlier this year.