ABC Newsline
ABC is urging members to weigh in on a long list of tax issues being considered by Congress over the next two weeks. Major tax increases, scheduled to take effect Jan. 1, would be devastating for small business and the construction industry, which is already strained by job loss and unemployment exceeding 17 percent.
If Congress fails to act, the estate tax—currently at zero for 2010—is scheduled to return to its highest rate of 55 percent with a $1 million exemption in 2011. The capital gains tax also will increase next year from 15 percent to 20 percent. In addition, the individual tax rates for the top two income brackets will increase from 33 percent to 36 percent and from 35 percent to 39.6 percent, respectively, which significantly impacts the 75 percent of small businesses that pay taxes on their business income based on these tax rates.
The Tax Increase Prevention and Reconciliation Act of 2005, also known as 3 percent withholding, is scheduled to take effect in 2012 and requires 3 percent be withheld on all government payments for products or services made by federal, state and local governments with total expenditures of $100 million or more. Construction contractors typically average a profit margin of 2.2 percent and thus will be hard hit by 3 percent withholding. ABC is asking for a full repeal of the 3 percent tax or a two-year delay if full repeal is not possible.
Also negatively impacting the construction industry in 2012 would be a provision contained in the health care reform bill requiring all businesses to submit a Form 1099 for every business-to-business transaction worth more than $600 dollars for both services and property. ABC is urging a full repeal of this bill as small businesses are disproportionately affected by burdensome federal regulations.
In addition, ABC supports the extension of the 2009 expired tax provisions, also known as “extenders,” and is pushing for the passage of its own bipartisan tax bill: American Job Builders Tax Reform Act of 2010 (H.R. 6097). To take action on these issues, visit the ABC Legislative Action Center.