Legislation Heads to President’s Desk for Signature
Earlier this week, both houses of Congress passed the Republican tax reform bill, H.R. 1, the Tax Cuts and Jobs Act.  For a full accounting of the tax reform bill and its impact on provisions important to the construction industry, please consult this comparison chart.  During the conference negotiations between the House and Senate, AGC outlined the construction industry’s priorities for tax reform. The legislation now heads to President Trump for his signature, which could be signed as early as this week or as late as January, depending on year-end spending negotiations.
Of the priorities AGC identified as critical to the construction industry, the conferees adopted a host of AGC’s recommendations, including:

• Reducing the corporate tax rate—to 21 percent;


• Providing tax relief for pass-through businesses—lower individual rates, and a new 20 percent pass-through deduction;


• Ensuring trust owners of pass-through businesses are eligible for the deduction;


• Repealing the corporate Alternative Minimum Tax (ATM);


• Substantially increasing the individual AMT thresholds, reducing its overall impact;


• Increasing the “small contractor exemption” from the percentage-of-completion method of accounting to $25 million;


• Increasing the exemption from the uniform capitalization rules (UNICAP), and availability of cash accounting to $25 million;


• Preserving the tax exemption for private activity bonds (PABs);


• Preserving a modified version of the historic tax credit;


• Doubling the estate tax exemption level to $10.98 million;


• Allowing used equipment to be fully expensed; and


• Preserving the work opportunity tax credit (WOTC).

Unfortunately, the conference report does retain the individual AMT (albeit at a much higher level than under current law), allows the individual tax relief (including the pass-through tax relief) to expire after 2025, does not fully repeal the estate tax, and does not include a long-term funding solution for the Highway Trust Fund, but, on balance, the final bill contains many construction industry priorities and AGC supported final passage.
It’s important to note that AGC did not support the initial tax reform bill as it provided little relief for construction firms organized as pass-throughs, eliminated Private Activity Bonds, and repealed the Historic Tax Credit.  Whereas other construction groups endorsed that version of tax reform, AGC continued to fight for a better bill for our industry. By undertaking a rigorous direct lobbying campaign, connecting construction company CFOs and CPAs with tax writers, and generating thousands of pro-construction messages from members to key legislators, AGC helped ensure Congress understood the impact of these provisions on the industry.
Nevertheless, there is still much work to be done in the New Year. Though Congress missed an opportunity to address the long-term solvency of the Highway Trust Fund, we remain focused on ensuring that this administration keeps its promise to rebuild the nation's infrastructure. We are also committed to modernizing multiemployer pension plans for the future, among other priorities for this industry.
We look forward to providing educational resources and opportunities soon via webinars and in-person conferences—like the AGC Convention—to help you and your construction business plan for future growth under this new tax law.
For more information contact Matthew Turkstra at [email protected] or (202) 547-4733.

On Dec. 21, the House of Representatives voted 251-169 for AGC-supported legislation – the Emergency Disaster Aid Package – which provides $81.2 billion in emergency funding for Hurricane and wildfire relief in Texas, Florida, California, Louisiana, Puerto Rico, and the U.S. Virgin Islands. It remains uncertain whether or not the Senate will vote on its version of the bill; however, senators from impacted states are strongly advocating for the bill.
The bill’s funds are critically needed to assist with the rebuilding efforts in communities impacted by this year’s devastating natural disasters. The majority of the funding will be distributed through the Federal Emergency Management Agency—$27.5 billion; the Department of Housing and Urban Development’s Community Development Block Grant Program –$26.1 billion for housing and infrastructure needs; and the Army Corps of Engineers Construction Account – $10.5 billion for ongoing construction projects and to expedite construction projects that will help mitigate future disaster damage.
The legislation will also provide $1.4 billion for Federal Highway Administration emergency relief funding and an increase for other transportation accounts.  A summary of the construction accounts in the bill can be found here.
Additionally, the bill reforms the Federal Emergency Management Agency’s disaster response and recovery program.
For more information contact Sean O’Neill at [email protected] or (202) 547-8892.

The 2018 Winter Safety & Health Conference will take place Jan. 10-12, 2018 at the Hilton in Long Beach, California. Join more than 250 industry professionals and participate in the development of regulatory and legislative activity on both a national and local level; assist in the development and creation of new safety training programs and products; and hear the latest initiatives from OSHA and other industry experts. Full details on the Conference and links to registration and the hotel room block can be found here.
For more information, contact Kevin Cannon at (703) 837-5410 or [email protected] or Nazia Shah at (703) 837-5409 or [email protected].

The Willis Towers Watson-AGC Construction Safety Excellence Awards (CSEA) is the industry’s elite safety excellence awards program for contractors of all types and sizes. The deadline for submitting applications is Friday, December 15, 2017. So, make sure your construction company doesn’t miss the opportunity to get recognized for its best-in-class safety program!
For more information on the Willis-AGC CSEA program, please visit www.agc.org/csea.

This week, President Trump’s nominee for Federal Highway Administrator, Paul Trombino, asked that his name be withdrawn from consideration. Mr. Trombino, the former director of the Iowa Department of Transportation, instead decided to remain in Iowa to take care of his ailing father, whose condition has recently deteriorated. AGC supported the nomination and called for his swift approval.
The Senate Environment and Public Works Committee approved Mr. Trombino’s nomination in October and has been awaiting for consideration by full Senate. No other individual has yet surfaced as a potential replacement. In the meantime, FHWA Deputy Administrator Brandye Hendrickson has been carrying out the Administrator’s responsibilities.
For more information, contact Brian Deery at [email protected] or (703) 837-5319.

This week, AGC and a coalition of organizations representing small businesses called on Congress to pass HIT relief for 2018 before January. The Health Insurance Tax (HIT) is one of the largest taxes imposed by the Affordable Care Act on the fully-insured health care market – the market that serves most small business. The tax was suspended for 2017; however, absent congressional action, the HIT is projected to return in 2018 at a rate of over $14 billion, which will ultimately be paid for by small businesses in the form of increased health care premiums.
For more information, contact Jim Young at [email protected] or (202) 547-0133.

This week, AGC joined industry allies in urging Congress to repeal the Cadillac tax in any end-of-year package.The “Cadillac Tax” originated in the Affordable Care Act and is a 40 percent excise tax on employer-sponsored health coverage whose benefits exceed specific thresholds. In 2015, the tax was delayed for two years, from 2018 to 2020. Employers are already beginning to feel the impact of the 2020 tax as they look at future health care benefits and restructuring those benefits to avoid the tax.
For more information, contact Jim Young at [email protected] or (202) 547-0133.

On Dec. 13, the House and Senate Republican conferees for H.R. 1, the Tax Cuts and Jobs Act of 2017, reached an agreement to resolve the differences between the two versions of the tax reform legislation. Last week, AGC sent a letter to the House and Senate negotiators outlining the construction industry’s priorities for the conference committee. AGC also worked with Senator Inhofe (R-Okla.) to ensure that trusts could access the pass-through business deduction, which was initially excluded in the Senate legislation. Based on comments made by multiple Senators, this effort is believed to be successful.
While no information about the agreement has been officially released—as of publication—press reports indicate that the broad outline of the agreement is as follows:

• Cut the corporate rate to 21 percent from 35 percent beginning in 2018;


• Cut the top individual rate to 37 percent for the highest earners, down from 39.6 percent;


• Provide a 20 percent deduction on pass-through business income, and extend that break to trusts as well as individuals;


• Repeal the Corporate Alternative Minimum Tax;


• Cap the mortgage interest deduction to loans less than $750,000; and


• Limit combined deductions for state and local income taxes and property taxes to $10,000.

There are still many unanswered questions about the agreement, including what happens to the Individual Alternative Minimum Tax (AMT), Private Activity Bonds (PABs), and the “small contractor exemption” from percentage of completion method of accounting, which could have a significant impact on construction businesses.  Press reports also indicate that the final conference report will be filed on Friday, setting up a vote on final passage next week.
As the final details of the conference report are worked out over the next two days, AGC will continue to engage with policy makers to ensure that construction industry priorities are considered in the final bill.
For more information, contact Matthew Turkstra at [email protected] or (202) 547-4733.

Jan. 10-12 in Long Beach, Calif.
The 2018 Winter Safety & Health Conference will take place Jan. 10-12, 2018 at the Hilton in Long Beach, California. Join more than 250 industry professionals and participate in the development of regulatory and legislative activity on both a national and local level; assist in the development and creation of new safety training programs and products; and hear the latest initiatives from OSHA and other industry experts. Full details on the Conference and links to registration and the hotel room block can be found here.
For more information, contact Kevin Cannon at (703) 837-5410 or [email protected] or Nazia Shah at (703) 837-5409 or [email protected].

Applications due Dec. 15
The Willis Towers Watson-AGC Construction Safety Excellence Awards (CSEA) is the industry’s elite safety excellence awards program for contractors of all types and sizes. The deadline for submitting applications is Friday, December 15, 2017. So, make sure your construction company doesn’t miss the opportunity to get recognized for its best-in-class safety program!
For more information on the Willis-AGC CSEA program, please visit www.agc.org/csea.