NAHB Lobbies for Extension of Tax Cuts

Washington, DC, April 19, 2012 -- The National Association of Home Builders is lobbying Congress to keep current income tax rates but simplify the tax code as part of a comprehensive tax reform effort in order to help small businesses to continue to serve as an engine of economic growth.

Testifying on behalf of NAHB before the House Small Business Committee, Maryland home builder Marty Mitchell said that given the huge complexities in tax law, today’s complicated federal tax system acts as a burden and hindrance on small businesses, which serve as the backbone of the economy.

Most small businesses, including the vast majority in the residential construction sector, are organized as pass-thru entities and therefore report and pay individual tax rates on their net business income. Thus, for small businesses, which traditionally serve as the nation’s foremost job creators, individual income tax rates are business tax rates.

“Therefore, NAHB strongly supports extending the 2001 and 2003 income tax cuts now scheduled to expire at the end of 2012 in order to improve the business environment in this country,” said Mitchell. “We need permanency in the tax code and certainty for small businesses.”

Absent congressional action, the top marginal tax rate will jump from 35% to 39.6% along with rate increases at the lower brackets.

NAHB is also urging lawmakers to extend the current 15% rate on dividends and capital gains, which is important to small business owners. A higher capital gains tax rate could also affect the multifamily sector, as the sale of apartment buildings can give rise to capital gains as part of the development and operation process.

“As many home building companies are family-owned like mine, it is also important that the present law estate tax rate rules also be extended or the tax itself eliminated,” said Mitchell.

He also stressed that it is critical that the mortgage interest deduction, which has been part of the tax system since 1913 and plays an indispensible role in promoting homeownership, should not be curtailed or eliminated as part of any tax reform effort.