Tax Rate Overhaul

Contact

Jeff Shoaf
Senior Executive Director
Government & Public Affairs
Associated General Contractors of America
2300 Wilson Boulevard, Suite 400
Arlington, VA 22201
USA
Phone: (202) 547-3350
Fax: (703) 837-5407
http://www.agc.org

Support Permanent Marginal, Capital Gains and Dividends Rate Reductions, and Repeal of the AMT

Background:

  • In 2001 income tax rates were lowered by 3 to 5 percent and are set to expire in 2012. For contractors, high income taxes— whether corporate or individual—reduce a company’s cash flow, thereby reducing the amount of money available to these businesses to expand, buy equipment, hire more workers, bid on future projects, and reduce debt. AGC supports lowering the federal tax burden on individuals, construction companies, and other businesses as a means of promoting investment, business development, and business expansion. High marginal tax rates inhibit entrepreneurial activity by penalizing successful businesses.

AGC Message:

  • Tax Uncertainty Hinders Long-Term Investment Strategies. Because of the expiring tax cuts, construction companies face great uncertainty about the future taxation of their business, and this will hinder long-term investment strategies.
  • Make the Marginal Tax Rates Permanent. The reduction of the individual rate to a top rate of 35 percent will expire in 2012, resulting in nearly a 5 percent tax increase. Tax increases enacted in the Obama healthcare overhaul are also set to go into effect after 2012. Together, top earners could see their taxes increasing by as much as 10 percent. The taxes will impact the roughly 75 percent of AGC members organized as S corporations, sole proprietorships, or partnerships that pay taxes at the individual rate.
  • Make Capital Gains Tax and Dividend Tax Reduction Permanent. In order to avoid a rollback of the cuts and institute a default tax increase, these cuts must also be made permanent. The current 15 percent rate on capital gains and dividend income extends through the end of 2012.
  • Total Elimination of the Alternative Minimum Tax. Congress instituted the alternative minimum tax (AMT) with the Tax Reform Act of 1986. The law imposes a minimum tax on an individual or on a corporation to the extent the taxpayer's minimum tax liability exceeds its regular tax liability. The AMT was not indexed for inflation, and is creeping into the middle class and is now beginning to hit smaller businesses and middle income taxpayers. Computation of the AMT is also administratively complex and inhibits the formation of capital and complicates equipment and property acquisition decisions.