"Cascade of negative economic impacts" to result from tax proposal, argues Real Estate Roundtable

Jan 31st, 2017

"As much as the real estate industry wants a “simpler, more rational tax code,” a comprehensive bill carries “potential for tremendous economic dislocation,” the Roundtable memo warned. Some reforms pose the risk of lowering property values, which would 'produce a cascade of negative economic impacts.'"

"...the group told Trump’s team it hopes to preserve an exemption for what is known as “carried interest” for real estate partnerships, deferrals of capital gains from exchanges of similar properties and the deductibility of business interest costs associated with borrowing."

“'A change in the law to tax all carried interest as ordinary income would be the first time that the sweat equity of an entrepreneur who is building a business would be taxed as ordinary income,' the Roundtable’s paper warned. 'It would discourage risk taking that drives job creation and economic growth. The proposal would make it more expensive to build ... especially in long neglected neighborhoods or on land with potential environmental contamination. As a consequence, significant higher-risk development simply will not happen. In short, it would have profound unintended consequences for main streets of cities and towns all across our country.'”

Tobias Salinger