Q. Does the new tax bill classify architects as manufacturers?
A. No. The tax cut for architects and engineers appears in a section of the bill separate from those that relate to manufacturers.

Q. I have a concern about the rising federal budget deficit. If architects had not been given this new tax break, what would have happened to the money? Would it have been used to lower the deficit?
A. If architects and engineers had not been included in the tax cut, the money saved would not likely have been used to lower the federal deficit. Because of the way the bill was structured and amendments managed, every new tax cut had to be paid for by a revenue offset. Many of the tax cuts in the bill were paid for by a variety of revenue raising measures (see below). So, if architects and engineers hadn’t lobbied for and won the $358 million tax cut, that money would have likely been used to finance the continuation of corporate tax shelters, such as the one that relates to personal use of corporate jets, which was eliminated in the Senate as part of the effort to finance the A/E tax cut.

Rest assured that if architects had not gotten a tax cut, the money would have gone to other businesses and industries. It would not have gone to reducing the federal budget deficit.

Q. Congressional sponsors of the tax bill say it is “revenue neutral.” What does that mean?
A. It’s the same issue. It means that the bill’s new tax cuts, such as the $358 million break that architecture and engineering firms will receive over 10 years, do not add to the federal budget deficit. That’s because the bill’s tax cuts are paid for by a number of revenue raising measures such as:

• Repealing the $50 billion export tax break (which was done in compliance with World Trade Organization rules)
• Eliminating $60 billion in tax shelters and tax avoidance practices
• Raising $19 billion from Customs’ user fees
• Deriving $6 billion from reclassifying an ethanol tax break from an excise tax to an income tax.

Q. I’ve read that the tax bill was loaded with special interest provisions for everything from ceiling-fan importers to film producers, from real-estate trusts to income averaging for fishermen. In lobbying for the tax cut for architects and engineers, did the AIA also support these other provisions?
A. No. The only three things the AIA supported were:

1. Inclusion of architects and engineers in the tax cuts
2. Extending the tax cuts to all A/E firms (sole proprietorships, partnerships, S corporations, and LLCs) in addition to C corporations
3. Deleting the provision of the bill that would have eliminated the 10 percent historic rehabilitation tax credit.

The AIA was successful on all three issues.

The way lawmaking on Capitol Hill now works, Congress passes fewer bills, but the bills they do pass often include a wide range of unrelated provisions. This process makes it very difficult for members of Congress to cast votes on final passage of bills that often include some provisions they support and some they oppose.

The AIA only lobbied for amendments that directly affected architecture firms and historic preservation and did not lobby for final passage of the overall bill or for any of the other provisions mentioned.

Q. Why does the tax relief apply only to gross receipts from A/E services performed in the U.S. for construction in the U.S.?
A. During the debate on the bill in the House, some Democrats, led by N.Y. Rep. Charles Rangel, opposed tax cuts for A/E firms out of fear that it would give Halliburton a special tax break for their operations in Iraq. That criticism continued in the Senate. The exclusion of work for projects overseas was added to address this criticism.

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