The National Electrical Contractors Association (NECA) has consistently called on Congress and the President to take up comprehensive tax reform, including lowering the corporate tax rates. The President’s latest proposal to “simplify the business tax code” is essentially a repackaged version of the reform proposal he offered last year. Unfortunately, it falls far short of real solutions for electric construction job creators.
“We are underwhelmed by the President’s tax reform proposal, to say the least,” said Marco Giamberardino. “NECA contractors have repeatedly called for sustainable, comprehensive tax reform. Such reform is critical to allow them to build their businesses and hire new workers after the recession. Instead, this proposal would significantly raise the tax burden on all pass-through businesses, on top of the tax increase they just shouldered in January. The Administration’s plan shows a fundamental lack of understanding about small businesses and how most construction contractors run their companies.”
This flawed proposal calls for a reduction of the corporate tax rate (C-Corp) to 28 percent while leaving the pass-through business (S-Corp) at a tax rate as high as 39.6 percent. The majority of NECA member contractors identify their companies as S-Corp, as do most small business owners across all industries. Ernst & Young’s 2011 report on pass-through companies found that S-Corps: 1) accounted for nearly 95 percent of all business entities; 2) employed 54 percent of the private sector work force; and 3) paid 44 percent of all federal business income taxes in 2008.
According to Nina Olson, the IRS’s National Taxpayer Advocate, who spoke at NECA’s 2013 Legislative Conference, “The vast majority of business entities are pass-through entities. So if you only do C-Corp tax reform in light of the multinational corporations, you are missing the real issues for the vast amount of economic and business activity for the United States.” [Watch Olson and the complete report from NECA’s 2013 Legislative Conference online.]
“This latest tax proposal stifles any growth those businesses could attempt,” Giamberardino said. “NECA will continue to advocate for comprehensive tax reform that addresses both the individual and the corporate tax codes. This approach is the best way to create a sustainable and competitive business environment for electrical contractors nationwide."
About the National Electrical Contractors Association
NECA is the voice of the $130 billion electrical construction industry that brings power, light, and communication technology to buildings and communities across the U.S. NECA contractors help customers achieve their goals for energy conservation, efficiency and renewable power. NECA’s advances the industry through advocacy, education, research and standards development.