Article written by Andy Holtmann on the Viewpoint blog.
The $2 trillion American Jobs Plan that is being placed before Congress is at the core of the latest 2021 infrastructure spending plans. Spending on this bill has been proposed over an eight year time period, funded by potential corporate tax increases and other measures spread across 15 years. Included in the $2 trillion package:
The goals of the American Jobs Plan are detailed in this White House Fact Sheet and Business Insider has provided a comprehensive breakdown of these figures here. Congress has not voted on this bill yet, and we don’t have a timeline for debate or a vote, but we could see significant movement by mid- to end-summer 2021.
The Takeaway: Of course this comes with the caveat that the proposal is subject to changes along the way. There has been talk of splitting this massive bill into smaller, more targeted packages. However, optimism is high that significant infrastructure spending — on a level not seen in decades in America — will be approved in some form. With this in mind, Viewpoint has created a Construction Infrastructure Resource Center to follow all aspects of this proposal and its potential impact on the construction industry to keep you up to date.
How the Infrastructure Package will Impact Construction
Will Your Taxes Increase?
Arguably the biggest challenge with the bill passing will be the impact it has on American business. Forbes breaks down some of the tax implications and which areas they might impact the most in a recent article: Corporate Tax Rate Could Jump from 21% to 28%. This is likely to be a significant sticking point for financial conservatives in Congress, who have been opposed to corporate tax hikes since they were dropped to 21% in 2017. Still, as Forbes notes, the 7% jump would help fund the infrastructure bill while remaining below the 35% corporate tax rates seen under Presidents Clinton, Bush and Obama.
Most contractors, though, won’t pay more taxes under Biden’s infrastructure plan, according to Construction Dive. The article cites Accountant Erin Roberts of Ernst & Young's global construction and engineering practice, who notes that the majority of construction firms in the U.S. are set up as “pass-through” entities and are not subject to corporate taxes. “According to Construction Dive, “Just 16% of nonresidential construction businesses in the U.S. are registered as C corporations, and thus subject to corporate tax rates. The lion’s share of the remaining 84% is comprised of S corporations, sole proprietorships and partnerships that are treated as pass-through entities, where their owners pay taxes on their profits at the individual rate.” (See this U.S. Census Bureau report for more information).
Meanwhile, billions of dollars flowing to civil projects and even general and specialty construction projects over the next eight years, represents the potential for significantly increased revenue and profit in the short- and long-term future.
What Technologies Do You Need?
Of course, this potential financial windfall will likely only apply to contractors that are scaled to meet modern deadlines and demands. While it remains unclear at this point whether strict technology and process measures will be a part of federally-funded construction contracts stemming from the American Jobs Plan, there has been a trend among other government agencies and contracts to require vendors to meet rigid technology standards and requirements.
What does this mean for contractors looking to take advantage of thousands of new jobs? They’d better have the modern technologies and workflows in place to satisfy any potential contract requirements. Among them:
Contact CDP to learn more about modernizing your technology.