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Without Congressional action the tax cuts enacted in 2001 and 2003 will expire in 2011. In a recent release, the Associated General Contractors of America believes the elimination of those tax cuts will have “a significant impact on the construction industry in particular and the economy in general.”
"In 2001 and 2003, Congress made the right decision to join with the President and lower the tax burden on our nation's businesses to stop a recession and keep the country moving forward," said Stephen E. Sandherr, CEO of AGC. "With a precarious economy, it is time for Congress make the cuts permanent."
Tax rates are scheduled to go up, including the pass-through entities such as partnerships and "S" corporations, which make up most businesses in the construction industry.
Also, the Death Tax jumps to a rate of 55 percent in 2011, while the impending enactment of 3 percent withholding on public works contracts will devastate construction businesses, which on average make 2.4 percent per contract, according to AGC. More than 60 percent of construction companies that file their business taxes at the individual level will see the marginal tax increases raise taxes up to 5 percent in 2011. AGC feels the sharp rise in the Death Tax ― from zero in 2010 to 55 percent in 2011 - will “take the life out of many small and medium sized companies.”
“Owners will be forced to take their focus off their businesses and instead focus on ways to save their companies for future generations and their current work force,” AGC stated. "Congress should permanently implement the Bush tax cuts and repeal the hazardous 3 percent withholding before it's too late," added Sandherr.