AGC to Fight Tax Hikes Included in Legislation Designed to Repeal Alternative Minimum Tax
Democrats call it “The mother of all tax reform” Republicans call it “The mother of all tax increases”
AGC views this legislation as especially punitive to closely held businesses such as S-Corps, LLCs and LLPs. House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) introduced his tax bill today, which includes a one-year patch of the Alternative Minimum Tax (AMT) and an eventual repeal of AMT paid for with a tax hike on AGC pass-thru companies. S corps, LLC and LLP businesses will face the sharpest increase under the bill.
While the bill lowers the C Corps tax to 30.5 percent, unfortunately it also places a 4 percent surcharge on adjusted gross income for tax payers with more than $150,000, or $200,000 of income annually for a couple. To make matters worse, the bill does not extend the tax rates that are currently in place so the top rate will rise from 35 percent today to about 44 percent after the current tax rates expire in 2011. In addition, the bill repeals the section 199 tax deduction for construction, amounting to another 3 percent increase. Finally, the bill forces S Corp service providers, such as engineers and CPA’s, to pay payroll taxes on all income, regardless if it should be treated as payroll or dividend (or distributive share) income.
AGC is educating Members of Congress on the harmful effects of this legislation, especially the way it treats S Corps and C Corps differently, penalizing small business owners for choosing the pass-thru method.
For more information, contact Heidi Blumenthal at email@example.com or (202) 547-8892.
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