December 08, 2004 10:20 AM CST

MCAA Promotes Apprenticeship Training through Legislation

By Marian J. Marshall

On November 16, at the request of MCAA, Congressman Mark Foley (R-FL) introduced a bill, H.R. 5366, which would authorize an enhanced (or double) tax deduction for contractors with certified apprenticeship training programs when the costs of their training meet or exceed one percent of their overall labor costs. The bill has been referred to the House Committee on Ways and Means.

This legislation is the product of much negotiation and compromise. MCAA had originally proposed a tax credit of up to $10,000 for the training and education of each apprentice, with a maximum of three new apprentices each year. The new bill has no ceiling for apprentices and because it proposes a tax deduction in lieu of a tax credit, we believe its chances of passage are greatly enhanced. Tax credits are not the most popular means of promoting programs and this new approach would simply allow contractors to double what is currently an ordinary business expense.

Because the bill was introduced in a Lame Duck session, it will have to be reintroduced in the next Congress. At that point MCAA will be looking for more sponsors for the bill in the House and a primary sponsor in the Senate. We will also be seeking out members with an interest in the bill to write their Congressmen and Senators. This legislation is vital to the masonry industry and the education and development of skilled craftsmen.

A copy of H.R. 5366 can be viewed below:

108th CONGRESS
2d Session
H. R. 5366

To amend the Internal Revenue Code of 1986 to provide employers a double deduction of certain employee training expenses.

IN THE HOUSE OF REPRESENTATIVES

November 16, 2004

Mr. FOLEY introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide employers a double deduction of certain employee training expenses.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. DOUBLE DEDUCTION OF CERTAIN EMPLOYEE TRAINING EXPENSES.

(a) In General- Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to itemized deductions for individuals and corporations) is amended by adding at the end the following new section:

`SEC. 200. DOUBLE DEDUCTION OF CERTAIN EMPLOYEE TRAINING EXPENSES.

`(a) In General- There is allowed as a deduction amounts paid or incurred by the taxpayer during the taxable year for the training of employees of such taxpayer if--

`(1) such amounts are also deductible by the taxpayer for such taxable year as ordinary and necessary business expenses under section 162(a), and

`(2) such training constitutes--

`(A) an apprenticeship program recognized and certified by the Secretary of Labor under section 1 of the National Apprenticeship Act (29 U.S.C. 50), or

`(B) a program licensed, registered, or certified by a State.

`(b) Limitation Based on Wages- No deduction shall be allowed under this section to any taxpayer for any taxable year unless the amount of the deduction which would (but for this subsection) be so allowed equals or exceeds 1 percent of the total wages paid or incurred by such employer for such taxable year.'.

(b) Clerical Amendment- The table of sections for part VI of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item:

`Sec. 200. Double deduction of certain employee training expenses.'.

(c) Effective Date- The amendments made by this section shall apply to expenses paid or incurred in taxable years ending after the date of the enactment of this Act.

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About the Author

Marian J. Marshall was the Director of Government Affairs for the Mason Contractors Association of America.