What does Trump’s new tax cut bill mean for construction? Furthermore, when you weave in the ongoing trends of growth towards modular, prefabricated construction and the new year – what will the outcome be for 2018 when you mix all three together?
Well it’s probably still too early to tell, but many indicators point to some levels of uncertainty that could stall some projects, while others predict continued levels of expansion for well-positioned firms to capitalize on this growth.
One section of the construction sector that could benefit the most from Trump’s tax cuts are small and midsize firms. The bill limits tax rates for pass-through businesses to 25%, which is good news for construction companies that have typically faced the highest effective tax burden of any industry (according to the U.S. Treasury Department). There is still work and negotiations needed by lobbyists of the construction sector, but many agree this could be a great first step in the right direction.
One area of concern is the affordable housing sector. The tax bill could have an unintended impact on the Low-Income Housing Tax Credit. While the details get a bit complex, the net of the analysis seems to concluded that a drop in the corporate tax rate will result in fewer low-income housing units.
So what can this mean for the off-site construction sector? Well in regards to the affordable housing market, this has been identified as an area ripe for modular construction from both a cost and speed-to-build perspective. If there is a drop on new projects, this could be an area to avoid, or consider diversifying into other areas of the market.
On the positive side, there are tremendously optimistic predictions for modular construction in sectors like government, military, disaster recovery, education, healthcare, and general corporate construction projects.
With many parts of the United States impacted this last year by floods and hurricanes, and fires in the west – modular, prefabricated construction can provide a fast, and affordable solution without compromising on quality. Furthermore, in the government and military sector, the advances in specialized materials and increased quality control that offsite construction offers can be a powerful solution to meet the unique security and durability requirements of this sector.
While there may be both positive and negative impacts of Trump’s tax cuts to the construction sector, it’s clear there will be an impact. This level of uncertainty can make modular buildings and prefabricated construction a great solution – promising the same if not superior quality product, but with decreased risk, and a more predictable business model.
To learn more about how modular construction could help your organization, visit us at Nadler Modular Construction, or call us at 888-329-6600.