Construction Legislative Week in Review
www.agc.org November 9, 2017
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On the Inside
TAX/ACCOUNTING
House Continues Work on Tax Reform Bill
WebEd: How Tax Reform May Impact YOUR Construction Business/Market
LABOR
House Passes AGC-Supported Bill to Clarify Joint Employer Definition
AGC Calls on Congress to Extend Legal Status for Some Construction Workers
SAFETY
OSHA Crane Operator Certification Requirement Extended
ENVIRONMENT
AGC Supports Energy Star Program
AGC Supports Repeal of Greenhouse Gas Rules
AGC ADVOCACY
Construction Advocacy Fund Receives Record $250,000 Contribution
AGC EVENTS
AGC Launches Diversity & Inclusion Awards
AGC and Sage Begin Surveying Members for Annual Outlook
TAX/ACCOUNTING
House Continues Work on Tax Reform Bill
 

The House Ways and Means Committee began a formal markup this week of Congressional Republicans’ tax reform legislation, H.R. 1, the Tax Cuts and Jobs Act.  AGC applauded the release of the long-awaited legislation last week, but noted specific concerns about the treatment of pass-through businesses (S-corporations, LLC’s, Partnerships, etc.) and the lack of infrastructure funding in the plan.  AGC is asking you to contact your members of Congress and urge them to treat S-corps fairly as compared to C-corps and maintain incentives for public and private construction in tax reform.

Senate Republicans are expected to unveil their version of a tax reform bill today, Nov. 9, but as of publication had not done so.

The House legislation would make sweeping changes for the tax code, eliminating dozens of deductions and credits in exchange for lower rates and a much larger “standard deduction.”  For a full summary and legislative text of the bill from the Ways and Means Committee see here and here. For construction priorities there are both good provisions and areas of concern:

Positives:

  • Repeal of corporate and individual Alternative Minimum Tax;
  • An increase in the small contractor exemption from percentage of completion accounting to $25 million from $10 million;
  • Estate tax exemption doubled, then repealed after 2023;
  • Full expensing for the next five years, and expanded Section 179 expensing over the same time frame; and
  • Reduced rates for individuals/pass-throughs/corporations 

Areas of concern:

  • Repeal of the Domestic Production Activities deduction (Section 199);
  • Elimination of 1031 Like Kind Exchanges for equipment (real property is retained);
  • No additional funding for the Highway Trust Fund;
  • Elimination of tax exemption for Private Activity Bonds and the Historic Tax Credit;
  • No composite plan model for multiemployer plans;
  • Elimination of Work Opportunity Tax Credit; and
  • Limitations on net operating loss carry back and carry forward.

The biggest tax-related concern, however, is how the legislation treats pass-through businesses.  While the corporate rate is reduced to 20 percent, and the bill caps business income at 25 percent, it also proposes that 70 percent of pass-through business income for owners active in the business be treated as wages, subject to the individual rates, and 30 percent capped at the 25 percent rate.  The net result is a blended rate of approximately 32 to 35 percent, plus payroll taxes for active owners of pass-through businesses.  Additionally, “service businesses” are excluded from accessing the 25 percent rate entirely, with 100 percent of their income treated as wages.  And while H.R. 1 includes an alternative method to calculate business income based on the amount of depreciable capital a business purchases, this method is currently inadequate in providing real tax relief for many construction firms.

An additional concern with the legislation is not only the absence of a permanent Highway Trust Fund fix but the termination of a key infrastructure financing tool – Private Activity Bonds (PABs). AGC continues to push for infrastructure to be included in the tax bill and in response to the absence of a Highway Trust Fund fix in the House bill, the AGC co-chaired Transportation Construction Coalition (TCC) sent a letter to Ways & Means Chairman Kevin Brady (R-Texas) underscoring the need to include a permanent solution to the Highway Trust Fund’s revenue deficit in tax reform.  Further, AGC and other infrastructure stakeholders sent letters to the House Ways & Means Committee and the Senate Finance Committee expressing our disappointment that the House bill terminated the tax exempt status of Private Activity Bonds and requesting that, not only should PABs be maintained in a final tax bill, but they should be enhanced for transportation and water projects and a new category of PABs should be established for public buildings. 

In addition, AGC has expressed its concerns with the repeal of the Historic Tax Credit, which would eviscerate the market for the rehabilitation of historic buildings that frequently have higher costs, greater design challenges and weaker market location. That credit has encouraged $131 billion in private construction investment since its inception. AGC will continue to push the House and Senate to include pro-infrastructure provisions as a part of a pro-growth tax reform legislation.

As the Committee has proceeded in the markup, AGC is working with Committee staff to improve the legislation so that it will have a greater benefit for the construction industry.  While it is expected that the bill will be passed out of the Ways and Means Committee today, we expect further changes before it comes to the floor of the House of Representatives.

For more information, contact Matthew Turkstra at matthew.turkstra@agc.org or (202) 547-4733.  Return to Top

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WebEd: How Tax Reform May Impact YOUR Construction Business/Market
Nov. 20, 2017 from 2:00 PM to 3:30 PM ET
 

Register today for this complementary webinar for AGC members. As you know, the most far-reaching tax reform legislation since 1986 is speeding through Congress. No matter what your construction market—public or private—or construction firm—c-corporation, s-corporation, LLC, LLP, or partnership—the passage of this legislation will have an impact on you.

During this webinar, AGC’s lead infrastructure and tax lobbyists on Capitol Hill—Sean O’Neill and Matt Turkstra— and Chief Economist Ken Simonson will discuss:

  • The latest updates on what’s in and what’s out of the tax reform legislation;
  • The likelihood of its becoming law and, if so, when it would take effect;
  • What this could mean for your construction business—no matter the type, c-corp, s-corp, LLC, partnership or so forth;
  • What this could mean for your construction marketplace—public or private; and
  • How AGC is advocating for your business and what you can do to help shape this critical legislation.

For more information or to register, click here.

For more information, contact Matthew Turkstra at matthew.turkstra@agc.org or (202) 547-4733.  Return to Top

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LABOR
House Passes AGC-Supported Bill to Clarify Joint Employer Definition
AGC Calls on Senate to Act
 

On Nov. 7, the House approved and AGC-backed legislation that restores the joint employer standard that existed prior to the National Labor Relations Board’s (NLRB) 2015 Browning-Ferris Industries decision. That decision broadened the definition of joint employer from those that share direct control over terms and conditions of employment to those with indirect control.

AGC and its multi-industry coalition long advocated for passage of the bill in the House and will now turn to advancing it in the Senate. In addition to the legislative remedy, AGC is also involved in a legal challenge to the decision and that challenge is currently under appeal in federal court.

The legislation, if approved by the Senate and signed into law, would simply clarify that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers. In addition, the bill targets changes made by the Obama administration’s Department of Labor which expanded the concept of joint employer under the Fair Labor Standards Act.

While the vote this week was bipartisan, it will be a challenge to overcome the senate’s 60 vote procedural threshold due to Democrat opposition.

For more information, contact Jim Young at youngj@agc.org or (202) 547-0133. Return to Top

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AGC Calls on Congress to Extend Legal Status for Some Construction Workers
 

This week, AGC joined several national construction trade associations in urging Congressional Leaders to extend the Temporary Protected Status (TPS) designations for individuals from El Salvador, Haiti, and Honduras. The TPS program is a category of legal status granted to individuals fleeing armed conflict, environments disaster or other extraordinary events resulting in them receiving authorization to work in the United States. The system has existed for decades and involves strong vetting and biometrics.

Of the 300,000 individuals with TPS, more than 50,000 work in the construction industry. Over the next several months the authorization for TPS will have to be renewed for individual countries. AGC is concerned that the Trump administration may not grant a renewal and could result in 50,000 legal construction workers without work authorization which will increase the workforce shortage in the industry. The letter sent by AGC encourages Congress to use its authority and take legislative action to ensure TPS holders can continue to work legally in the country.

For more information, contact Jim Young at youngj@agc.org or (202) 547-0133. Return to Top

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SAFETY
OSHA Crane Operator Certification Requirement Extended
AGC Supports OSHA’s Final Rule & Year-Long Extension
 

On Nov. 9, the Occupational Safety and Health Administration (OSHA) issued a final rule to further extend the employer's responsibility to ensure crane operator competency and enforcement for crane operator certification from Nov. 10, 2017 to Nov. 10, 2018. During this time, OSHA will work to address stakeholder concerns over the operator certification requirements in the 2010 Cranes and Derricks in Construction Standard. AGC submitted comments on the initial proposal in favor of the extension, which will avoid any potential disruption in crane operations on construction sites.

For more information, contact Kevin Cannon at cannonk@agc.org or (703) 837-5410. Return to Top

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ENVIRONMENT
AGC Supports Energy Star Program
Helps Contractors Meet Green Building Owners’ Requirements
 

AGC, as a member of the High Performance Building Coalition, on Nov. 7 expressed support for the federal government’s Energy Star program, as the House of Representatives weighs legislation proposing significant changes to the successful program.  The program helps contractors select cost-saving energy efficiency building solutions and products as a means toward achieving various green building owner requirements.  Earlier this year, the Trump Administration’s proposed budget zeroed out funding for the program. 

Currently, the House Energy and Commerce Committee is considering legislation that would move the Energy Star program wholesale from the U.S. Environmental Protection Agency to the Department of Energy, relax third-party certifications, and require the voluntary and non-regulatory program to comply with the Administrative Procedures Act.  AGC and its coalition urged caution against making changes to this time-tested program that has helped industry deliver over $146 billion in energy costs savings to businesses and homeowners.  The coalition also urged further study on the costs of moving the program before such a decision is made.

For more information, contact Melinda Tomaino at tomainom@agc.org or (703) 837-5415. Return to Top

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AGC Supports Repeal of Greenhouse Gas Rules
 

AGC submitted comments this week to the Federal Highway Administration (FHWA) supporting its proposal to repeal an Obama-era rule requiring states to measure greenhouse gas (GHG) emissions when planning transportation improvement projects. AGC joined with 38 other organizations with similar interests in transportation infrastructure enhancements in challenging FHWA’s authority to mandate the measurements pointing out that Congress, in the Fixing America’s Surface Transportation (FAST) Act, called for development of performance measurement standards but specifically limited those measures to safety related issues, pavement and bridge conditions and congestion.

The GHG measurement rule was issued by the U.S. Department of Transportation in the final days of the Obama Administration. AGC raised concern about the rule when it was initially issued and in a meeting with Transportation Secretary Chao in her first days on the job following Senate confirmation. AGC suggested repealing the rule in written comments to both the White House and the Transportation Department on regulatory reform.

AGC also submitted separate comments pointing out that the GHG measurement rule would undermine the transportation planning process, could adversely impact air quality and duplicate other federal initiatives related to GHG already underway. AGC’s comments this week strongly supported FHWA’s proposal to repeal the rule.

For more information, contact Brian Deery at deeryb@agc.org or (703) 837-5319. Return to Top

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AGC ADVOCACY
Construction Advocacy Fund Receives Record $250,000 Contribution
 

AGC of America President Art Daniel, joined by fellow members of the AGC of Texas, presented the Construction Advocacy Fund with a chapter check for $250,000 during last week’s Highway, Transportation & Utility Infrastructure Conference. This is the Fund’s single largest contribution to date.

President Daniel said, “To protect our industry and expand market opportunities in this complex legislative and political environment, AGC of Texas members felt a sense of duty to support the Construction Advocacy Fund.” He added, “On most construction industry issues, if AGC doesn’t do it, it doesn’t get done!”

The Fund serves as the advocacy arm of AGC of America financing efforts to expand markets, protect the industry from regulatory overreach, and advocate for our members. It funds a host of critical campaigns, including AGC’s ongoing efforts to fight for federal infrastructure investments, push back against costly, and needless, regulatory burdens, sustain legal fights, promote workforce development and workplace safety, and enhance construction technology.

Unlike AGC PAC, the Fund is permitted to accept contributions from corporations, individuals, and PACs in unlimited amounts. However, the Fund is prohibited from making contributions to candidates and instead supports activities beyond dues capabilities.

Visit constructionadvocacyfund.agc.org for more information and to make a contribution.  Return to Top

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AGC EVENTS
AGC Launches Diversity & Inclusion Awards
Apply by November 15, 2017!
 

AGC of America is proud to announce the launch of the AGC Diversity & Inclusion Awards program. AGC will present a total of six awards in three award categories: (1) the Diversity & Inclusion Excellence Awards, (2) the Chapter Diversity & Inclusion Award; and (3) the Diverse Business of the Year Award. These awards seek to raise awareness of the value that a diverse workforce and inclusive environment brings to a company by spotlighting diversity and inclusion champions within AGC. By recognizing these diversity and inclusion champions, AGC hopes to inspire other AGC member-companies to engage in activities that will promote diversity and inclusion both within the Association and the industry. 

AGC member companies and chapters in good standing who meet the competition requirements are encouraged to apply online for some much-deserved recognition. Apply by November 15, 2017. Learn more about AGC of America’s Diversity & Inclusion Awards program at www.agc.org/diversityawards.

For more information contact Brynn Huneke at brynn.huneke@agc.org or (703) 837-5376.  Return to Top

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AGC and Sage Begin Surveying Members for Annual Outlook
Help Us Generate a Comprehensive Outlook for 2018 by Taking the Survey Today
 

Each year around this time, AGC asks you – our members – to predict what next year will be like for your business.  This year AGC has partnered with Sage to prepare questions that focus on expectations for market performance, hiring, labor market conditions, etc.  Please take a moment to complete the survey here: 2018 Construction Industry Hiring and Business Outlook

For more information, contact Nahee Rosso at rosson@agc.org or (703) 837-5348. Return to Top

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