Economic and Tax Policy
Most specialty trade contractors invest heavily in equipment. ASA believes that the construction companies, as well as other businesses, should be encouraged to increase their investment in such equipment through the investment tax credit, direct expensing and accelerated depreciation.
The Bankruptcy Code is one of the most complex and least understood legal systems with which subcontractors must deal. Increasingly, court rulings seem to be biased against the creditor. ASA believes that the Code needs to be amended to assure that the rights of both the bankrupt and its creditors are protected. ASA supports legislation to:
- Modify the preference programs so that any challenge to a preference of a payment under $10,000 made to a creditor must be made in the jurisdiction of the creditor receiving payment.
- Modify the preference provisions to provide that a preference only arises in the case of a guarantee given by an “insider” rather than a “non-insider.”
- Modify the preference provisions to provide an exception to “insider” status when the goods or services were sold to the debtor in the ordinary course of business and the transferee is deemed to be an insider solely because the transferee holds a guarantee of payment or performance from another insider of the debtor.
- Amend the definition of property of the debtor’s estate to expressly exclude “trust funds” recognized by state law.
- Provide some form of priority or secured creditor status vis-à-vis the estate of the debtor to the extent a potential lien or bond claimant has relinquished such security prior to a challenge of a preferential transfer.
- Amend the phrase “ordinary business terms” to mean payment consistent with a creditor’s established course of dealing with the debtor.
- Change the trigger date for the creditor’s filing of a reclamation action by requiring that reclamation filing may be made by the creditor within 10 days of the notice of bankruptcy filing made by the clerk of the court.
- Prohibit trustees and debtors-in-possession from selling, using or in any disposing of assets that “may” be subject to a reclamation claim.
- Establish a requirement for expedited exercise by the debtor or its trustee of its right of election to enforce or not the particular subcontract involved.
- Establish a right and procedure to remove equipment and tools owned by a subcontractor pending exercise of an election regarding enforcement of executor subcontracts.
- Accord a subcontractor a priority claim for work necessarily performed, materials delivered or value confirmed in the interim between the petition and the election as administrative expenses of the estate, in the event of the rejection of an executor subcontract.
- Explicitly recognize that unpaid subcontractors or suppliers should be accorded a priority lien for the balance owed to them for work performed on each project against the proceeds flowing to the debtor from the owner which were generated by such work (i.e., statutory recognition of the judicial doctrine of “equitable liens” as an alternative to constructive trusts).
- Establish expedited procedures for small business, as long as such procedures adequately protect the rights of subcontractors and suppliers.
ASA supports a decrease in the capital gain rate in order to encourage increased investment.
ASA supports efforts to attain and maintain good air quality without sacrificing economic growth. ASA supports amendments to the Clear Air Act to focus on measures with the lowest social and economic costs to bring communities into compliance, to assist state and local governments to develop appropriate means to achieve compliance and to recognize good faith efforts to achieve compliance in the levying of sanctions.
The completed contract method of accounting is a method of reporting income for tax purposes on long-term contracts. It allows a contractor to wait until a contract is completed and accepted before declaring a gain or loss on the contract for income tax purposes. The method is the most accurate for determining gain or loss on the contract for income tax purposes. The method is the most accurate for determining gain or loss on construction contracts due to the inherent risk and the unique nature of construction. Therefore, ASA supports the availability of the completed contract method of accounting for tax purposes on all construction contracts.
ASA believes the revitalization of specific urban areas and neighborhoods is primarily the responsibility of state and local governments. The principal role of the federal government in restoring urban areas is ensuring a dynamic and expanding national economy. Nonetheless, ASA supports federal legislative proposals to establish enterprise zones. However, the areas designated should be limited in number and carefully monitored.
ASA supports federal legislation to allow a closely-held business to be passed on intact without estate tax consequences if the heirs continue to operate the business. If the business is sold or liquidated, it should be taxed at rates no higher than ordinary income.
ASA supports converting the gas tax from a flat-rate user fee to a percentage-rate sales tax so that highway trust fund income changes automatically with inflation in gas prices and with the demand for highway funding.
ASA supports tax-exempt financing and incentives for green construction projects. Providing incentives for sustainable construction will mobilize market forces in the construction industry behind sustainable development. Green bonds, tax credits and grant programs make it easier for construction project owners to offset the costs of site remediation, sustainable design features and environmentally-friendly technologies and products.
Bidding and Market Development: “Business Benefits of Green Buildings,” “Green BIM: How Building Information Modeling Is Contributing to Green Design and Construction”
ASA supports the establishment of a permanent infrastructure bank, as part of a comprehensive federal infrastructure program. Any proposal for an infrastructure bank must provide adequate payment protections for construction contractors, subcontractors and suppliers.
The insurance industry has long enjoyed an exemption from the antitrust laws of the United States. Although ASA recognizes the validity of sharing actuarial data, ASA believes that exemption has reduced the availability of some types of insurance and increased prices for most insurance. Thus, ASA supports repeal, or at least reform, of the McCarran-Ferguson Act concerning the antitrust exemption for insurance companies.
ASA recognizes that legitimate independent contractors are key members of the construction team. However, ASA abhors attempts by unscrupulous employers who intentionally misclassify employees as independent contractors and thereby gain an unfair competitive advantage. Thus, ASA supports oversight and even-handed enforcement of existing regulations dealing with wage fraud. Further, ASA supports legislation to establish a reasonable and clear definition of an independent contractor that can be enforced in an even-handed manner by the IRS.
The unpredictability of court interpretations of different state product liability laws has made understanding parties’ rights and obligations almost impossible. The legal rules differ so vastly that a claimant could win a product liability suit in one state but lose an identical suit in another state. ASA supports reform of product liability law through the enactment of uniform federal product liability law. Such a law should clearly define the responsibilities of parties who manufacture, sell, install and use products for injuries involving these products.
ASA recognizes the potential savings and value of recycling construction and demolition debris. ASA supports the reuse of materials in construction where those materials have proven performance thresholds.
Sustainability-conscious construction, renovation and retrofit projects save money throughout the life of the structure, drive lasting, long-term economic growth, and reduce emissions. Widespread investment in sustainable construction principles leads to the creation of innovative technologies and common-sense solutions to sustainability and building life-cycle problems. ASA supports sustainable construction initiatives that help preserve America’s valuable resources. Sustainable construction requires clear and careful planning and proportional allocation of risk. The following factors should be considered when formulating public policy on the management of sustainable construction projects:
- Project owners and design professionals must ensure the clear definition of sustainable construction materials and methods in the plans and specifications at bid time to direct construction team members on their responsibilities toward meeting sustainability goals.
- Subcontractors must be protected from liability for the sustainability rating of a project beyond the responsibility to build according to the plans and specifications offered at bid time.
- Subcontractor payment should be contingent on completion of the specified portion of the project, not on achieving a certain green certification status.
Responsible planning and construction can help our nation grow efficiently and effectively. ASA supports reasonable and practical sustainable development initiatives which can meet the nation’s growing infrastructure needs, foster economic growth in communities and promote a greater quality of life.
The tort liability system has created tremendous uncertainty in the ultimate costs of a liability contract. ASA generally supports legislation, at the federal and state levels, that would provide a more effective means of resolving conflicts and disputes while assuring equitable and timely justice for individuals and society as a whole. Specifically, tort reform should (1) encourage settlements and alternative dispute resolution mechanisms; (2) limit joint and several liabilities; (3) limit the collateral source rule; (4) limit non-economic damages; and (5) discourage frivolous suits.
Some public utilities offer services traditionally provided by specialty contractors in the construction trades. Public utilities are monopolies guaranteed a profit by public service commissions. Private contractors, on the other hand, must include the cost of overhead and administration in their prices to customers. ASA supports action by state governments and public service commissions to carefully scrutinize operations by public utilities to prevent unfair competition with private contractors.