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Industry Associations Speak Against House-Passed Bill

Industry Associations Speak Against House-Passed Bill

Last week, the House narrowly approved the Build Back Better Act, legislation that contains positive housing provisions but also includes other elements detrimental to the residential construction sector and manufacturers. Several industry associations spoke up against it. The following quotes are taken directly from their websites:

National Association of Wholesaler-Distributors (NAW):

The National Association of Wholesaler-Distributors (NAW) issued the below statement following the passage of the Build Back Better Act in the House of Representatives.

From Eric Hoplin, NAW CEO: 

The Build Back Better Act is an existential threat to family-owned and small businesses and the employees and families who depend on them – and the Senate is now the only thing standing between massive tax increases and Main Street businesses. At a time when companies are facing rising inflation, labor shortages, and a supply chain under pressure during a pandemic, raising taxes is an unfathomable idea that could only be conceived in Washington, DC.

Despite President Biden and Speaker Pelosi’s insistence that it only taxes the rich, BBB is a massive tax increase on family-owned and small businesses, introducing new taxes on pass-through companies that would be targeted under the same framework aimed at wealthy individuals. Thousands of individual and family-owned companies will be disproportionally affected because the Biden administration and House Democrats fail to comprehend what they have done to S-Corporations and other pass-through businesses on Main Street.

We urge the Senate to stop these massive tax increases and protect Main Street businesses and their employees from the Build Back Better Act.

 

National Association of Manufacturers (NAM):

Following the vote on the Build Back Better Act in the U.S. House of Representatives, National Association of Manufacturers President and CEO Jay Timmons released this statement:

“This bill, regardless of its intentions, is paid for by taxes that will hit manufacturers harder than other industries. We oppose this legislation that would stifle our ability to expand our operations, hire more workers and raise wages and benefits. This comes at a time when Americans are counting on manufacturers to lead our recovery and respond to supply chain challenges. The ‘book tax’ in particular harms manufacturers more than others because it increases the cost of machinery and equipment purchases, which are central to manufacturers’ operations and our ability to create and support American jobs. The tax reforms of 2017 gave manufacturers the tools to invest in our people and our communities, making 2018 the best year for manufacturing job creation in more than two decades. We should build on that progress—not return to archaic tax policies or target manufacturers with new taxes.

“We also strongly oppose the new provisions on drug pricing that will slow down pharmaceutical manufacturers’ capability to further accelerate the type of innovation that helped us fight back against COVID-19. Congress should not be putting future cures at risk. Manufacturers call on senators to oppose this bill.”

Background on manufacturing growth following the enactment of 2017 tax reform:

    • In 2018, manufacturers added 263,000 new jobs. That was the best year for job creation in manufacturing in 21 years.
    • In 2018, manufacturing wages increased 3.0% and continued going up—by 2.8% in 2019 and 3.0% in 2020. Those were the fastest rates of annual growth since 2003.
    • Manufacturing capital spending grew 4.5% and 5.7% in 2018 and 2019, respectively.
    • Overall, manufacturing production grew 2.7% in 2018, with December 2018 being the best month for manufacturing output since May 2008.

National Association of Home Builders (NAHB):

In letter sent to House leaders prior to the vote, NAHB said: “While this bill represents an historic investment in our nation’s housing, NAHB is concerned the tax increases, new building and energy code requirements and increased fines and penalties for OSHA violations would be detrimental to the housing industry during a critical phase in our nation’s economic recovery.”

The Good

As noted above, the Build Back Better Act includes several provisions that are good for housing. Of particular benefit to the housing industry is the $150 billion in new funding that will support the creation and renovation of affordable housing across the country. The legislation would:

Homeownership Investments

      • Establish a new first-time, first-generation downpayment assistance program for home buyers;
      • Create a new home loan program to subsidize 20-year mortgages for first-generation home buyers;
      • Fund a new HUD demonstration program to help expand small-dollar lending options for home buyers; and
      • Greatly expand funding for the USDA Section 504 program to help low-income home owners in rural areas repair, upgrade, and preserve affordable homes.

Housing Appropriations

      • Provide $10 billion for the Home Investment Partnerships (HOME) program. This grant program has traditionally been used as gap financing in conjunction with other programs like Project Based Section 8 or the Low-Income Housing Tax Credit;
      • Deliver $1 billion for the Project-Based Section 8 program (PBS8) For the first time in years, this will allow for new contracts under PBS8 — which is a big win for the membership; and
      • Earmark $3 billion for the Community Development Block Grant (CDBG) program. This program has traditionally funded needs such as infrastructure, community centers and housing renovation — but not new construction. This package specifically states that new construction is now an approved use of CDBG funds.

Zoning and Education

      • Address local zoning reform that will encourage the streamlining of new construction;
      • Invest in career and technical education, including programs such as Jobs Corps and YouthBuild;

Taxes

      • Increase funding for the Low-Income Housing Tax Credit (LIHTC), although the bill fails to take full advantage of this historic opportunity to further strengthen the program by leaving out many of the LIHTC provisions initially included in the House Ways and Means Committee draft;
      • Provide relief for taxpayers affected by the current limit on state and local tax deductions, known as SALT; and
      • Provide long-term extensions many of the existing energy tax incentives, although NAHB opposes the structural changes made to the 45L new energy efficient home tax credit.

The Bad

As noted above, there are several provisions in the Build Back Better Act that NAHB opposes, including onerous tax and code requirements that would hurt small business owners and worsen housing affordability:

Taxes

      • The expansion of the Net Investment Income Tax (NIIT) to include investment income derived from an active trade or business. In opposing this provision, NAHB said: “Real estate is a capital intensive business, and increasing the cost of doing business by either limiting losses—which are generated by investing in more housing, an activity Congress should seek to encourage—or increasing taxes on rental income via the expansion of the NIIT, is difficult to justify at a time when we face a serious housing shortage. Congress should carefully consider how these tax hikes may exacerbate the ongoing housing affordability crisis facing the United States.”
      • Retroactive tax changes to qualified contracts, which could affect the LIHTC program.
      • Requiring the use of Energy Star for new residential construction as the sole means to qualify for the 45L tax credit. In opposing this provision, NAHB noted that Energy Star is a niche market — less than 10% of single-family and multifamily units were certified in 2020 — and while the program has its merits it will never be adopted widely.

Codes

The requirement for use of the “latest published editions of relevant performance-based building codes.” While this provision is intended to incentivize the adoption of the latest published edition of a building code, it is unclear whether states and local governments will continue to have the ability to evaluate and amend updated editions of a consensus-based code prior to adoption.

Moreover, provisions requiring the use of “performance-based building codes and standards” does not guarantee that the code or standard is developed through a consensus process. It is critical that codes and standards are developed in a transparent process to ensure code development fully reflects the public interest.

NAHB is also concerned with grant programs that promote adoption of ‘net-zero’ provisions, as included in the appendix to the 2021 edition of the International Energy Conservation Code (IECC). These targets are not appropriate or cost-effective for many jurisdictions; rather, the Department of Energy should help states advance the codes in a manner that that best fits the needs of state and local governments.

Next Steps

It is unclear if the Senate will pass the Build Back Better Act “as is” or modify the bill and send it back to the House for another vote. If the Senate moves to alter the legislation, NAHB will advocate for changes that are beneficial to the housing industry.

 

Associated General Contractors of America (AGC)

Texas, Wyoming Have Worst Job Losses Since February 2020, While Utah South Dakota Add the Most; South Carolina and New Hampshire Have Worst One-Month Losses, While Louisiana is the Top Gainer

Only 16 states and the District of Columbia have added construction jobs since just before the start of the pandemic in February 2020, according to a new analysis of federal employment data released today by the Associated General Contractors of America. Association officials noted that prospects for the sector’s recovery will be diminished should the House-passed Build Back Better bill become law.

“Although activity picked up in most states in October, construction employment remains below pre-pandemic levels in two out of three states,” said Ken Simonson, the association’s chief economist. “The record number of job openings shows contractors are eager to hire more workers but can’t find enough qualified applicants.”

From February 2020—the month before the pandemic caused projects to be halted or canceled—to last month, construction employment decreased in 33 states, stalled in Hawaii, and increased in only 16 states and D.C. Texas shed the most construction jobs over the period (-46,400 jobs or -5.9 percent), followed by New York (-42,800 jobs, -10.5 percent) and California (-21,300 jobs, -2.3 percent). The largest percentage losses were in Wyoming (-14.0 percent, -3,200 jobs), New York, and Vermont (-9.8 percent, -1,500 jobs),

Utah added the most construction jobs since February 2020 (8,200 jobs, 7.2 percent), followed by North Carolina (7,700 jobs, 3.3 percent), Washington (4,900 jobs, 2.2 percent), and Idaho (4,900 jobs, 8.9 percent). The largest percentage gains were in South Dakota (10.5 percent, 2,500 jobs), Idaho, and Utah.

From September to October construction employment decreased in 14 states, increased in 34 states and D.C., and was unchanged in Alabama and Virginia. South Carolina lost the most construction jobs over the month (-1,900 jobs, -1.7 percent), followed by Missouri (-1,500 jobs, -1.2 percent). The largest percentage decline was in New Hampshire (-2.2 percent, -600 jobs), followed by Vermont (-2.1 percent, -300 jobs).

Louisiana added the largest number and percentage of construction jobs between September and October (8,200 jobs, 7.1 percent). California was second in construction job gains (7,500 jobs, 0.8%), while West Virginia had the second-highest percentage increase (2.3 percent, 700 jobs).

Association officials cautioned that the Build Back Better measure, which passed in the House earlier today, will undermine the construction sector’s recovery. They noted that the measure’s tax and labor provisions will stifle investments in construction activity and make it even harder for firms to find qualified workers to hire. They urged Senators to reject the massive new spending bill.

“The last thing Washington should be doing is making it even harder for firms to find projects to build or workers to hire,” said Stephen E. Sandherr, the association’s chief executive officer. “Yet the hyper-partisan Build Back Better bill will hobble employers with new mandates even as it stifles private sector demand with new taxes and regulations.”

 

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