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TAUC Legislative and Regulatory Update, November 2017

 

TAUC Legislative & Regulatory Update - November 2017

As we head towards the holiday season, all eyes are on the House of Representatives this month as they consider legislation providing comprehensive tax reform. The release of the initial House draft proposal has set off a lobbying frenzy in the Nation's Capital. This is the start of a very difficult legislative journey, and Republican leaders have set a very ambitious goal of having the final legislation to President Trump by Christmas.

Here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.

Tax Reform

The House Ways and Means committee is set to begin marking up the first overhaul of the nation's tax code since the Tax Reform Act of 1986. Last week, Committee Chairman Kevin Brady (R-TX) released the draft of the plan that will serve as a starting point for legislative consideration.

While much of Washington is still in the process of trying to digest the "Tax Cuts and Jobs Act" proposal to determine what the proposed changes will mean to their industries, here's a high-level summary of key aspects:

Reduces the current marginal individual income tax brackets to four from seven -- 12, 25, 35 and 39.6 percent -- lowers taxes by increasing the income ranges affected by each rate, and nearly doubles the standard deduction;

  • Repeals the Alternative Minimum Tax; 

  • Doubles the estate tax exemption immediately and repeals the tax in six years:
     
  • Creates a new 25 percent tax rate for "pass-through" businesses -- sole proprietorships, partnerships and S corporations; 

  • Lowers corporate tax rate to 20 percent from 35 percent and eliminate many business deductions and credits; and

  • Allows temporary immediate expensing of assets, limits back deductibility for corporate interest expenses, and implements a one-time repatriation tax on overseas profits.

As we reported last month, TAUC has joined with other members of the Construction Employers of America in writing to the Congressional tax writing committees to advocate for the inclusion of policies that support and strengthen the competitive position of signatory contractors. Among the policies advocated in the letter include: increasing infrastructure investment, authorizing use of composite pension plans to provide retirement security to multiemployer plan participants, strengthening employer provide health insurance and eliminating the Cadillac tax on high-cost plans, leveling the playing field in the construction industry by cracking down on contractors who deliberately misclassify their employees as independent contractors.

Infrastructure Package

While most of Washington is focused on tax reform, there is still a lot of anticipation for the Administration's infrastructure package. CEA and others have called on Congress to act sooner rather than later on President Trump's call for significant investment in infrastructure. Few specific details have been made public to date, as the Administration and Congressional leaders continue to say that an infrastructure bill will have to wait until after tax reform.

The Administration continues to focus on significantly shortening the federal environmental review and permitting process. They are also expected to propose $200 billion in actual federal funding intended to leverage $800 billion in additional non-federal investment. On a related note, President Trump's economic adviser Gary Cohn told a group of bipartisan members of Congress that an increase in the gas tax could be considered early next year as part of the infrastructure package. Separately, there was also a report that the White House intends to support a 7-cent-per-gallon gas tax increase to fund a 2018 infrastructure plan. The gas tax has not been raised since 1993 and it is not indexed to inflation.

Clean Power Plan

The Trump administration formally proposed to repeal the Obama Administration's Clean Power Plan (CPP), which set greenhouse gas standards for existing power plants. The CPP was on hold under a stay from the U.S. Supreme Court as litigation against the rule is considered. In repealing the plan, EPA contends that the rule violated federal law and would cost consumers $33 billion in 2030. EPA will also consider writing a narrower replacement for the rule.

While EPA has moved aggressively on the CPP, it has taken no action on the Obama administration's rule limiting greenhouse gas emissions from new and modified coal and natural-gas-fired power plants. The so-called "new source" rule is currently in place. EPA is reviewing it as part of President Trump's "energy independence" executive order. A federal court case challenging the rule has been stalled.

11/07/2017