Sourced from Professional Roofing Magazine
In December 2017, Congress approved the Tax Cuts and Jobs Act (H.R. 1) of 2017, the most sweeping tax reform legislation in more than 30 years. NRCA was actively involved at each stage of the legislative process and is pleased the final bill recognizes the roofing industry's highest priorities. The positive results demonstrate the value of NRCA's active engagement in the policymaking process in Washington, D.C., and at the grassroots level on behalf of its members.
Prepping for tax reform
When Congress first started seriously contemplating major tax reform in 2011-12, NRCA already was well-positioned to undertake efforts to ensure any tax reform bill would benefit the roofing industry. Since the early 2000s, at the direction of NRCA's Government Relations Committee, NRCA has been working to educate members of Congress regarding how federal tax policy affects the roofing industry. These early efforts set the stage for NRCA to be successful when the stars finally aligned for tax reform enactment during the fall of 2017.
Given how the debate over tax reform evolved in Congress, NRCA's top priority was building support among key lawmakers to ensure any tax bill would reduce tax rates for all types of businesses, including corporations and businesses organized as pass-through entities. It also was important to maintain a degree of parity in tax rates among varying business structures. NRCA surveyed its membership and determined about 75 percent of NRCA members are pass-through entities (S corporations, limited liability companies, partnerships and sole proprietorships) that pay taxes at individual rates. The remaining 25 percent of NRCA members are corporations subject to the corporate tax rate. At the time, many members of Congress were focused on passing so-called "corporate-only" tax reform that would reduce tax rates only for corporations, and some members of Congress even contemplated increasing individual tax rates.
As Congress continued to debate tax reform, NRCA's advocacy efforts focused on demonstrating to lawmakers the importance of applying tax reform to "main street" businesses as well as corporations to boost economic growth and create high-paying, family-sustaining jobs in the roofing industry. To maximize its influence, NRCA became a steering committee member of the Parity for Main Street Employers. This coalition proved crucial for positively influencing the debate within Congress regarding the complex mechanisms involved with federal tax policy.
Given NRCA's multiyear effort to educate lawmakers about the issue, it is gratifying the final tax bill dramatically lowers tax rates for all types of businesses. The tax reform law reduces the corporate tax rate from 35 to 21 percent and provides a new 20 percent tax deduction for pass-through businesses that effectively lowers the top individual tax rate from 39.6 to 29.6 percent. The reductions in tax rates will enable all types of roofing industry businesses to retain more of their hard-earned income and provide more capital for reinvesting in their operations and employees.