House, Senate pass $1.5 trillion tax reform bill
- The House and Senate voted Tuesday to pass the final version of a $1.5 trillion tax reform bill, according to The New York Times. The House is scheduled to revote Wednesday morning after mandatory revisions are made in accordance with House rules.
- The final version of the bill retains both wind and electric credits as well as tax-exempt bond financing of sports venues, according to Lexology.
- The new bill also retains private activity bonds (PABs), which represent a near-19% of the municipal bond market, or almost $85 billion, and sets a pass-through entity deduction of 20% and a corporate tax rate of 21%.
Unlike PABs, which allow private businesses working on public projects to borrow at the same tax-free rate as government agencies, lower tax rates touch all companies regardless of whether they're involved in public or private work.
Aside from the preservation of PABs — which will likely play a role in any significant infrastructure programs — it is likely the pass-through deductions and new corporate tax rate that will have the most impact on construction companies. This is especially true for the pass-through deduction as many small businesses are structured as pass-through entities like Subchapter S corporations and limited liability companies.
Designers and professional consultants still will not be able to take advantage of the pass-through deduction, a point that will continue to rile that segment of the construction industry. Environmentalists are also likely to lodge protests against the energy exploration that will be permitted in the Alaskan Arctic National Wildlife Refuge. According to Bloomberg, however, the inevitable environmental reviews and legal challenges could mean it will be years before the energy sector is allowed to begin drilling there.
- The New York Times Republican Tax Bill Passes Senate in 51-48 Vote
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