Amerimix
BMJ Stone
EZG Manufacturing
Federated Insurance
Fraco USA, Inc.
Hohmann and Barnard, Inc.
Hydro Mobile, Inc.
iQ Power Tools
Kennison Forest Products, Inc.
Mortar Net Solutions
Non-Stop Scaffolding
Pullman Ermator
Southwest Scaffolding
SPEC MIX LLC
Stabila
Tradesmen's Software, Inc.
January 2007

A New Battle Rages in Washington

President’s Message


By

In May 2006, the Mason Contractors Association of America’s (MCAA) Director of Government Affairs, Jessica Johnson Bennett, attended a ceremony on the South Lawn of the White House as President Bush signed into law the Tax Increase Prevention and Reconciliation Act of 2005.

We were very pleased when Bush signed this law, as many of the provisions help small businesses – the tax cuts are meant to put money back into the pockets of individual taxpayers, investors and small business owners. In addition, the legislation includes key provisions that will aid small-business owners, such as mason contractors, in continuing to grow and expand their businesses and help strengthen the U.S. economy.

However, in July, our staff brought to my attention a provision that was inserted into the final legislation, which most members of Congress were not even made aware. Included in the tax package wording is a new requirement mandating a 3-percent tax withholding on the entire contract amount for work performed for federal, state and local government entities. Unfortunately, Bush had already signed the bill into law, and this provision is now part of the already confusing and intricate tax code that takes affect in 2011.

A provision inserted into the final legislation of the Tax Increase Prevention and Reconciliation Act of 2005 is very concerning for mason contractors.
A provision inserted into the final legislation of the Tax Increase Prevention and Reconciliation Act of 2005 is very concerning for mason contractors.

As a business owner, I am deeply disturbed by this new provision, which does not even take into account the profit expected, or even realized, from the contract; it simply applies to the total contract amount. Anyone who has ever secured a contract with a government entity knows that this would be especially onerous for construction services, where the average profit margin is often less than 2 percent.

I am concerned and exasperated about this withholding provision, and I am sure others will join me when they learn of this unfair and unrealistic provision. With all due respect, I am not certain Congress has fully thought through the issues regarding the forthcoming mandate. This provision will just cause more confusion, angst, complexity and unneeded costs for small businesses such as mason contractors.

The key issues Congress should be concerned about include: the impact the 3 percent withholding mandate will have on small business cash flow, and their ability to effectively compete for government contracts. This will take away essential operating funds, which are used to buy supplies, to pay workers, as well as for overall administrative expenses associated with government contracts. In addition, this provision would limit severely the companies that bid on and secure government contracts. To say the least, this provision certainly would not make bidding on a government contract attractive to mason contractors. There also will be the added hassle of bookkeeping, placing yet another burden on the businesses doing the work.

This is a lose-lose situation for taxpayers as well. I fear that businesses contracting with the government will attempt to pass on the cost of the mandate back to the government, rolling it back into the contract and passing it onto the taxpayers. Congress really has to ask itself whether the provision actually will prove to be a revenue raiser for the country, as it is meant to be, or simply cause unintended consequences for small businesses and taxpayers.

The only certainty is that cash flow for mason contractors will likely be negatively impacted as they are forced to overpay their taxes significantly and wait for repayment. Essentially, contractors would be floating the government an interest-free loan for a period of time. While the provision may be designed to enhance tax compliance, its implementation likely will be a significant punishment to contractors who already comply with tax laws. It is unfair to inflict this penalty on contractors who already are in compliance.


Chairman’s Message Archive

Masonry’s Future

August 2018
Masonry’s Future

Worthwhile Work

June 2018
Worthwhile Work

A New Beginning

February 2018
A New Beginning

Givers Gain

January 2018
Givers Gain

Things to Remember

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Looking Forward

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A Fresh Start

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Who Moved My Cheese?

September 2016
Who Moved My Cheese?

Giving back

December 2015
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An exciting year ahead

February 2015
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Defining success

December 2014
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Staying busy for you

August 2014
Staying busy for you

Ready for action

February 2014
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Thanks

January 2014
Thanks

Happy holidays

December 2013
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MCAA Midyear update

The MCAA in D.C.

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The MCAA in D.C.

A Lot Happening

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Eye opening

June 2013
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Positive movement

March 2013
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Headed to Vegas

February 2013
Headed to Vegas

New beginning

January 2013
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It’s finally over

December 2012
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My trip to the Rockies

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My trip to the Rockies

The 2012 election

October 2012
The 2012 election

Stay involved

September 2012
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Networking

August 2012
Networking

Summer time

July 2012
Summer time

Exciting time

June 2012
Exciting time

Working for you

May 2012
Working for you

New beginnings

March 2012
New beginnings

Farewell!

February 2012
Farewell!

One more to go!

January 2012
One more to go!

Join us in Vegas

November 2011
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As the world turns

August 2011
As the world turns

A Bright Future

May 2011
A Bright Future

Tidbits From MCAA

March 2011
Tidbits From MCAA

Time Flies By

February 2011
Time Flies By

The End of the Year

December 2010
The End of the Year

Busy Times!

November 2010
Busy Times!

South of 40

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What Are We Doing?

August 2010
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Moving Forward

March 2010
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A Fond Farewell

February 2010
A Fond Farewell

A New Year

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A New Year

Start the Year Strong

December 2009
Start the Year Strong

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September 2009
MCAA in D.C.

Brick Voids

August 2009
Brick Voids

Vision 2020

February 2009
Vision 2020

State of the Association

February 2009
State of the Association

The Silver Lining

January 2009
The Silver Lining

Impact on the Hill

June 2008
Impact on the Hill

New Horizons

February 2008
New Horizons

Wrapping up Another Year

December 2007
Wrapping up Another Year

Greetings From Italy!

November 2007
Greetings From Italy!

We Need Your Help!

January 2005
We Need Your Help!

The Strength of Unity

November 2003
The Strength of Unity

Changing of the Guard

February 2002
Changing of the Guard

“We can make a difference together and bring masonry back.”

Paul Oldham
Ollier Masonry, Inc.
MCAA member since 2001

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