Construction and engineering groups are sifting through the sweeping tax-code rewrite that the Senate approved on Dec. 2, but some see it as better than the House-passed version, particularly in its treatment of partnerships, sole proprietorships and other “pass-through” entities. The American Institute of Architects, however, is strongly criticizing both chambers' bills.

The Senate’s passage of an estimated $1.4-trillion-plus package of tax cuts early in the morning of Dec. 2 by 51-49, almost completely on party lines, marked a major step forward for the legislation, the top legislative priority for congressional Republicans and the Trump administration. {Bill text, posted by the New York Times.]

Next, Senate negotiators will have to work out differences between their bill and the $1.4-trillion version that the House passed on Nov. 16.

Some senators felt that earlier versions of the Senate measure didn’t provide enough tax relief to pass-throughs, which are taxed on individual, not corporate, rates. The bill’s prime author, Finance Committee Chairman Orrin Hatch, and other GOP leaders won votes by increasing a deduction for pass-throughs to 23%, from 17.4% in an earlier version.

But other Senate bill provisions dealing with individual taxes, such as the new set of tax brackets and thresholds, the pass-through deduction would expire Dec. 31, 2025.

The bill’s cut in the corporate rate, which applies to so-called C-corporations doesn’t kick in until 2018 but it becomes permanent after that. 

Stephen Sandherr, Associated General Contractors of America CEO, said in a Dec. 1 statement that the Senate bill had been “substantially improved” in the days leading up to the final vote.

Sandherr noted that a majority of construction firms are pass-throughs, and noted “the Senate proposal has wisely increased the pass-through deduction from 17.4% to 23%” but added that “the fact that the cut is temporary is concerning.”

AIA is pledging to fight some of the bills' provisions. Thomas Vonier, AIA president, said in a Dec. 3 statement that the House and Senate measures "exclude architects and other small-business service professions by name from lower tax rates." He added, "There is no public-poliicy reason to do this."

AIA also is unhappy that the House tax bill eliminates the credit for historic buildings; the Senate retains the credit, but weakens it, AIA says.

Vonier said that if either bill is approved, "Congress would be making a terrible mistake."

The National Association of Home Builders, which opposed the House measure,  said in a Dec. 2 blog post that “the Senate bill represents a step in the right direction.” NAHB said, for example, that the Senate version, unlike the House’s, retains the cap on mortgage-interest deductions at $1 million.

In addition, NAHB said the Senate-passed measure “brings more parity in how pass-through businesses and ‘C-corporations’ are taxed, enabling them to maintain a level playing field with large corporations.”

AGC and other construction groups hoped Congress would use tax legislation to provide financial help for infrastructure programs, such as the federal-aid highway program. But that hasn’t happened. “This is a missed opportunity,” Sandherr said.

The Association of Equipment Manufacturers hailed the Senate’s action. AEM President Dennis Slater, in a statement, called the measure’s approval, “a monumental step toward realizing comprehensive tax reform for the first time in over a generation.”

He said the bill will improve U.S. equipment makers’ international competitiveness and foster new manufacturing jobs.

Story updated on 12/4/17 with comments from American Institute of Architects