In testimony before a packed hearing, commercial construction contractors pushed for more open and fair competition and stressed that a bill to prohibit project labor agreements (PLAs) would reduce costs to taxpayers on publicly funded projects.   Members of Associated Builders and Contractors of Michigan told the House Commerce Committee that House Bill 4287 will bring about greater competition and protect Michigan workers from being denied work opportunities based upon their labor affiliation.

"House Bill 4287 is not anti-union and should not be perceived in any way as anti-labor," testified Dan Acciavatti, chief financial officer for Pamar Enterprises Inc. of Clinton Township.  "Public officials who oversee publicly funded construction projects should strive to build quality, safe projects at the lowest possible cost to taxpayers.  This bill will go a long way to ensure that the competitive bid process is preserved and that all responsible, qualified contractors and workers are able to bid on and build projects across our state, ending the discriminatory, 'union only' clauses that some governmental agencies are using in their bid documents.

The bill sponsored by Rep. Joe Haveman (R-Holland) and dozens of co-sponsors, would essentially eliminate union-only PLAs, a practice that forces non-union workers and firms to comply with collective bargaining agreements and thus discourages non-union firms from bidding. 

"It's a non-starter," Acciavatti stressed.   "Contractors don't bid on PLA projects because they would end up paying double in benefit costs and expose themselves to other serious liabilities.  ABC's goal is to promote the competitive bidding process and ensure that all qualified workers and contractors be allowed to work on all public construction projects."  

"Like other reform-oriented states, Michigan must pass legislation to create a level playing for everybody," explained Chris Fisher, ABC of Michigan president.  "Such a law will ensure that the state does not discriminate against any business or worker on the basis of union affiliation.  Michigan taxpayers will also benefit from having public construction that is completed by the lowest, most responsible and qualified bidder to ensure greater accountability of public funds." 

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Associated Builders and Contractors today issued the following statement on U.S. House passage of  the Small Business Paperwork Mandate Elimination Act (H.R. 4) calling for the full repeal of the expanded tax reporting requirements included in the Patient Protection and Affordable Care Act (PPACA). The provision in the health care law mandated that all businesses submit a Form1099 to the Internal Revenue Service for all transactions for goods or services exceeding $600 a year.

"ABC members are grateful this compliance nightmare may soon come to an end," said ABC Vice President of Federal Affairs Geoff Burr. "The construction industry is already reeling from significant job loss with an unemployment rate exceeding 22 percent - more than twice the national average. Adding more bureaucratic layers and costs to an industry under siege would not facilitate a speedy economic recovery.

"However, this should not be seen as a one-time victory for the business community, but rather a step in the right direction," said Burr. "It's time to simplify our complex tax code and repeal other burdensome and costly tax provisions, such as the 3 percent withholding and the estate tax. For the construction industry, these are some of the greatest obstacles to increased economic growth and job creation."

"Our hope is that a conference committee made up of members from both the House and the Senate come to a quick resolution in order to remove this cloud of uncertainty that is hanging over construction contractors," Burr said.

The amendment repealing the expanded reporting on Form 1099 was offered in the U.S. Senate to the Federal Aviation Administration Air Transportation Modernization and Safety Improvement Act (S. 223), and was agreed to by a bipartisan vote of 81-17. 

Save on Payroll Taxes

Employers that reimburse employees for business expenses can save payroll taxes by setting up an "accountable" plan. With an accountable plan that meets IRS rules, expense reimbursements are not treated as wages - avoiding FICA (Social Security and Medicare) taxes on those amounts.

Employees must provide an adequate accounting of their expenses (some type of log plus receipts or other substantiation) and return any excess reimbursement or expense allowance within a reasonable period. The reimbursed expenses must have a clear business connection.

Employees don't have to pay FICA taxes or income taxes on reimbursements received under an accountable plan. If there is no accountable plan in place, amounts provided to employees for business expenses are included in their income. Employees may deduct the expenses, but only if they itemize (rather than claim the standard deduction). Even then, the expense deduction is limited - and it's possible that an employee will receive no deduction.

Social Security Tax Cut

Workers and self-employed individuals are enjoying a reduction in the Social Security taxes they owe on their wages and self-employment income in 2011. Under the 2010 Tax Relief Act, two percentage points have been shaved off Social Security tax rates in an effort to put more money in taxpayers' wallets and stimulate the economy.

How Much Is It Worth?

At most, the rate reductions mean tax savings of $2,136 for an individual (2% of $106,800, the maximum amount subject to Social Security tax in 2011) and twice that amount ($4,272) for a married couple who both receive the maximum benefit from the rate reduction. The Medicare payroll tax (imposed at a rate of 1.45% for employees and 2.9% for self-employed individuals) continues to apply to all earnings.

Making Plans

Although lawmakers may hope that America's workers will go out and spend their tax windfalls, there's something to be said for using the extra money to contribute to more lasting financial goals. For example, taxpayers who are saving for retirement may find it relatively painless to increase their retirement plan or individual retirement account contributions by the amount saved in payroll tax. Or the extra money in each paycheck might give an extra cash boost to taxpayers who are trying to pay off their credit card balances or reduce other outstanding debt.

No Break for Employers

Congress did not extend the Social Security payroll tax cut to employers. They continue to be liable for their share of the Social Security tax at a rate of 6.2% on the first $106,800 of an employee's earnings.

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