In the Great Recession, Taxpayers were plundered to pay for the losses incurred by the greed of Wall Street and the Banks as deficits spiraled out of control. Giving Billionaires and corporations massive tax writes offs and increasing taxes on the rest of us would lead to another recession and increased bailouts needed for Freddie and Fannie as well as hundreds of banks that are not properly capitalized to offset losses caused by another major slump in the economy and home prices.
The Financial Crisis and Great Recession of 2008/2009 was primarily fueled by the severe decline in home prices. Repealing the 1031 exchange would cause a significant reduction in residential real estate demand, which would lead to a collapse in home prices. This would cause millions of borrowers to lose trillions of aggregate equity and would cause millions to go back under water on their mortgage.
The loss of business interest deductions and the 1031 exchange would cause most businesses that use financing in their operations to dramatically scale back operations or go out of business altogether and certain industries would be entirely wiped out. Massive layoffs would ensue and America would be catapulted into another Great Recession, which could further accelerate additional job losses.
Repealing the 1031 exchange would cause tens of thousands of real estate agents, brokers, and brokerages to go out of business. 1031 Exchanges make up a large portion of investment real estate transactions. Without 1031, many investors would simply decide not to sell, which would have a materially negative impact on the real estate market and the professionals and support staff that serve that market.
Repealing business interest deductions and the 1031 exchange would crash the economy and real estate market by effectively increasing taxes on all businesses and real estate investments that utilize financing. These new taxes will disincentivize real estate and business owners from selling their property and trading up, causing a severe reduction in real estate and business transaction volume, and leading to a catastrophic decline in those markets.
The loss of business interest deductions and the 1031 exchange would cause most businesses that use financing in their operations to dramatically scale back operations or go out of business altogether and certain industries would be entirely wiped out. Businesses utilize 1031 exchange when making expansions and transitions. These new taxes would devastate most businesses, lead to hundreds of thousands of layoffs, and catapult the economy back into a deep recession.
The vast majority of small to medium-sized farms utilize financing and the loss of business interest deductions would cause most of these farms to scale back operations or close down altogether. Farmers utilize 1031 exchanges to make it possible for them to grow and complete important transitions without being crushed by taxes on capital gains that they have not received. The proposed bill would be a tragedy for most individual and family-operated farms.
Thousands of securities representatives, RIAs, support staff, and broker dealers include 1031 exchanges as a core part of their strategy to assist investors. Hundreds if not thousands of representatives and related staff would be immediately out of business if 1031 exchange is repealed.
A key component of business brokers' transaction volume comes from helping clients successfully navigate their 1031 exchanges. Without 1031s, many business sales would not occur, driving many business brokers out of business. The loss of business interest deductions would also put many thousands of companies out of business, further jeopardizing this important engine of our economy.
A crucial component of equipment and car rental companies is the ability to complete a 1031 exchange to update vehicle inventory that is ultimately used by the customer and the ability to write off business interest. Without 1031 and business interest deductions, most of these companies would cease to be viable, which would lead to thousands of layoffs, a reduction of competition and selection, and an increase in repair costs, safety issues, and rental costs.
REITs/Limited partnerships, and LLCs often use 1031 exchanges in order to conservatively redeploy capital and prudently dispose of stabilized or non-conforming assets. Repealing business interest deductions and the 1031 exchange would materially impair many of these companies' ability to execute their business plan, would drastically reduce their after-tax income to shareholders, and would negatively impact shareholders and employees.
If the 1031 Exchange is repealed, hundreds of 1031 exchange accommodators employing thousands of people would immediately go out of business.
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