Presidents often have a big impact on rules impacting contractors since many such requirements can be done through executive orders or regulatory actions without the need for Congress to step in. Because of that, it may be helpful to take a look at how the new administration would impact construction.
An article in Holland and Knight states that although the Trump Administration has continued to enforce the Service Contract Labor Standards and the Davis-Bacon Act, there are differences in how the new administration would utilize existing and recently repealed regulations.
The Trump administration rescinded the Non-displacement of Qualified Workers regulation which was enacted during the Obama Administration and had required incoming contractors to make offers of employment to the incumbent SCLS-covered work force. We can expect the Biden administration to issue new regulations similar to the Obama-era one.
President Trump recently issued an executive order regulating the content and the use of certain types of diversity training. We can expect Biden to rescind that order shortly after taking office.
The Fair Pay and Safe Workplace regulation which had required contractors to disclose previous labor violations when submitting proposals was stayed by a federal court in October 2016 and rescinded under the Congressional Review Act soon after President Trump took office in 2017. Although labor enforcement has been relatively active during the Trump Administration, you can expect that under Biden, the U.S. Department of Labor would become more active once his appointees take their positions.
During a recent speech, President-Elect Biden stated that he wanted the government to purchase American-made goods from contractors. The difference between the two administrations may be whether the Biden Administration will engage with multinational organizations such as the World Trade Organization.
Construction Dive reports that Biden is expected to increase the corporate income tax rate from 21% to 28% according to Frank Scala, partner of Marcum's Assurance Services Group in New York City, and to raise individual tax rates for those making more than $400,000 per year. The latter would impact company shareholders who report business earnings on their personal returns via ownership in pass-through entities like Sub Chapter S corporations.
The likelihood that Biden will be able to make tax-related changes greatly depends on the outcome of the January 5th Senate runoff in Georgia which will determine whether the Republicans lose or maintain their majority.
There is a case to be made for some contractors to accelerate income and increase their tax liability for 2020 if they believe that tax rates will rise in 2021 under a Biden administration. If that's the strategy, then they should also postpone big purchases until next year as a way to offset those potentially higher tax rates. The idea is to pay more in 2020 taxes but at a lower rate than is expected to go into effect for the 2021 tax year.
According to Construction Dive, President-elect Joe Biden has picked Pete Buttigieg to be the secretary of the Department of Transportation and many construction-related groups say that they see promise in a Buttigieg-run DOT.
"It would certainly be good to have a former mayor of a city like South Bend in this post. He is in a unique position to understand how vital good transportation connections are to the success of local manufacturers, educational institutions and main street businesses."
Vice president of public affairs & strategic initiatives for the AGC's of America | Brian Turmail
Tom Smith, executive director of the American Society of Civil Engineers was also upbeat in his assessment of the new secretary. He believes that Buttigieg has seen firsthand how infrastructure policy and investment impact families, and businesses and local economy.
Buttigieg was the first presidential candidate to respond to an ASCE-sponsored infrastructure forum in February. During that event, he offered detailed, tangible plans for modernizing our nation's roads, bridges and water systems.
Buttigieg unveiled a $1 trillion infrastructure plan in January as part of his presidential campaign which also sheds light on how he will lead the DOT.
It included $165 billion for the Highway Trust Fund to make it solvent through 2029. This would be funded through a user-fee system - perhaps a vehicle-miles traveled fee, to replace the gas tax.
Creating jobs was also a cornerstone of the infrastructure plan he released in January, as he looked to create 6 million "well-paying jobs with strong labor protections."
His plan called for updating and fixing at least half of all roads and bridges in poor conditions by 2030, with $50 billion in state grants to repair bridges.
He also included electric vehicles in his infrastructure plan to go hand in hand with his climate plans. Buttigieg proposed offering $6 billion in grants and loans for states and cities to partner with private companies and unions to do so.
That is in line with the Biden administration's goals. Biden wants to put the United States on an irreversible path to achieve net-zero emissions, economy-wide, by not later than 2050 according to his campaign website. He has also hinted at modernizing highways and roads.
The new DOT chief will pick up where an administration that worked on deregulation and collaborating with private companies left off. President Donald Trump's executive order waiving environmental regulations accelerated infrastructure projects even though Congress has not passed an infrastructure bill yet.
