House-Passed Tax Bill Has Pluses, Minuses
A $112-billion tax package that the House approved on May 28 is a mixed bag for the design and construction industry. Construction groups like some of the provisions, including an extension for the popular Build America Bonds program. But some of the bill’s revenue-raising tax hikes drew strong criticism from architects, engineers, contractors and real estate interests.
The Senate has the next move. If that chamber amends the measure, it would return to the House, says Karen Lapsevic, Associated General Contractors’ director for tax, fiscal affairs and infrastructure finance. “So there might be a couple of more votes on this bill,” she says.
Construction groups support the measure’s two-year extension for the Build America Bonds program, which is set to expire on Dec. 31. The volume of the bonds, which fund public works, has risen to about $97 billion, driven by a 35% federal interest-rate subsidy. The House bill changes the subsidy to a less-generous 32% in 2011 and 30% in 2012.
The bill also boosts highway funds by $521 million. House Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) criticized the Hiring Incentives to Restore Employment Act, signed on March 18, for a highway aid provision he says benefited only four states. Adding the $521 million will increase highway aid for 37 states, Oberstar says.
The new House bill allows multi-employer pension plans, which cover union workers in construction and other industries, to spread losses from the 2008-2009 financial slump over 30 years, instead of 15 now. Randy DeFrehn, National Coordinating Committee for Multiemployer Plans’ executive director, says that and other provisions are “pretty powerful” aid for those pension plans.
| + | Build America Bonds, two-year extension but with a cut in interest-rate subsidy. |
| + | Additional $521 million in federal highway funds. |
| + | Assistance for multi-employer pension plans and single-employer, defined-benefit plans. Allows plans to spread losses over longer period of time. |
| + | Accelerated depreciation for leasehold and restaurant upgrades, one-year extension. |
| + | National Housing Trust Fund infusion of $1 billion to finance construction and rehab of low-income rental housing. |
| + | Tax credit for builders of energy-efficient homes, one-year extension. |
| - | Require some small, Subchapter S professional-services firms to pay higher Social Security taxes. AIA, ACEC and others oppose the provision. |
| - | Require investment fund managers to pay higher tax rate on income from “carried interest” from such funds. AGC, real estate interests oppose the provision. |
| Sources: House Ways and means committee, Joint tax committee, AIA, ACEC. AGC, Real estate Roundtable | |
But the American Institute of Architects and American Council of Engineering Cos. are fighting a provision to require certain professional-service firms categorized as S corporations to pay increased payroll taxes. AGC and the Real Estate Roundtable also say a provision to tax income from “carried interest” on investment funds at higher rates would be a big blow to commercial real estate.
