NLBMDA UPDATE
Congress is looking at $6 trillion, and change “Where we choose to invest speaks to what we value as a Nation,” reads the first line of President Biden’s message in his proposed budget request to Congress. The documents outlining proposed spending for fiscal year 2022 run more than 70 pages and describe some $6 trillion in federal spending. There’s a lot to digest, including new taxes on corporations and wealthy individuals and previously released infrastructure proposals which include the American Jobs Plan and the American Families Plan. The National Lumber and Building Material Dealers Association (NLBMDA) released a summary and analysis of the huge spending plan, which calls for new investments in housing and extending energy efficiency tax incentives for residential and commercial construction. The NLBMDA said it has been lobbying senior officials within the administration and Congress since the beginning of 2021 on critical tax priorities. Partly in response to NLBMDA’s advocacy, Biden’s budget proposal does not include any changes to the current 20% pass-through deduction available to owners of sole proprietorships, partnerships and S corporations. Additionally, members of Congress have directly told NLBMDA that they expect the other tax increases included in Biden’s proposals to face opposition by members on both sides of the aisle significantly due to NLBMDA’s lobbying efforts. The NLBMDA noted that the president’s annual budget request is seen as an aspirational document that
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Taxes: No change to the 20% pass-through
deduction for small businesses. Increase the corporate tax rate to 28%. Increase the top marginal individual
income tax rate to 39.6%. Tax capital gains at ordinary income rates
for households making over $1 million. Currently, this would mean a tax on capital gains at 37% for high-earners. Under Biden’s plan, the top capital gains tax rate would be 39.6% (43.4% when including net investment income tax).
lays out the administration’s legislative agenda and is not required to be passed by Congress. These proposals are simply recommendations for Congress to consider as they put together appropriations bills for the next fiscal year. The NLBMDA said that it is continuing to analyze the president’s budget request and will continue to lobby the administration and Congress on the LBM industry’s legislative priorities. Here is an outline of what is contained in Biden’s 2022 budget request. [The full budget request can be found at dealer.org.] President Biden’s FY 2022 Budget Request: American Jobs Plan: $2.3 trillion for infrastructure investments including roads, bridges, water systems, housing, rail and broadband. American Families Plan: $1.8 trillion for investments in childcare, education, paid leave and other social programs. Discretionary Spending: $1.5 trillion for discretionary spending which includes annual funding for defense and other federal agencies.
Ends practice of “stepping-up” the basis
for capital gains in excess of $1 million unless the property is donated to charity. Includes exemption for family-owned businesses and farms that are given to heirs who will continue to run the business.
Housing and School Construction: Expand the Low-Income Housing Tax Credit. Create a new Neighborhood Homes
Investment Tax Credit. The credit would support new construction for sale, substantial rehabilitation for sale, and substantial rehabilitation for existing homeowners.
Provide federally subsidized state and
local bonds for school construction and improvements.
Energy Efficiency: Extend the section 25C tax credit for
home improvements for five years and increase the lifetime limit to $1,200.
Increase the section 45L tax credit for new
home construction from $2,000 to $2,500 and extend the tax credit five years.
Increase the maximum section 179D
deduction for energy-efficient commercial buildings from $1.80 to $3.00 per square foot for qualifying property placed in service after Dec. 31, 2021.
HARDWARE + BUILDING SUPPLY DEALER JUNE 2021
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