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“Not Enough In My Pockets, So You Need My Pants…??”
By Sherman Ragland | November 6, 2007
Appears that it is not just state legislators who are “Out of Control”…
This just in from the folks at the International Counsel of Shopping Centers (ICSC), a US based, international trade association, which represents the interests of real estate investors involved specifically in the development and ownership of shopping centers:
“…House Ways and Means Chairman Charlie Rangel (D-NY) is moving forward rapidly with legislation that would make major changes to the tax structure in this country. The bill proposes a massive tax increase for partnerships… The Ways and Means Committee is scheduled to vote on the measure this week and full House consideration is planned before Thanksgiving. We know that commercial real estate projects, most of which are organized in partnerships, will be significantly impacted.
While private equity and hedge fund managers are supposedly the target of carried interest legislation, over 45 percent of partnership tax returns are filed by real estate partnerships. This proposed tax increase, which has been suggested as one of several revenue raisers to pay for a one year fix for the Alternative Minimum Tax, will more than double the taxes on the general partner, including already existing partnership arrangements. If this disincentive is enacted, the real estate community will face greater risk, much less likelihood of profit and little appetite for current and future deals. This is a serious threat to commercial real estate.
ICSC believes that Chairman Rangel’s proposal, in many ways, is reminiscent of the passive loss rules enacted as part of the Tax Reform Act of 1986. No one foresaw that those changes would have contributed to the savings and loan collapse, the formation of the RTC (Resolution Trust Corporation) and a credit crunch that caused a major downturn in the real estate industry. ICSC remains apprehensive that this proposal could create the same significant economic decline in communities across the country.
While it is important that Congress hold the line on spending, going forward with a carried interest tax hike will harm an industry that has been a solid and steady job creator and the backbone of the US economy of the last several years…”
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Tags: alternative minimum tax, charlie rangel, commercial real estate, icsc, interest legislation, massive tax increase, partnerships, partnership arrangements, partnership tax returns, resolution trust corporation, sherman ragland, shopping centers, tax reform act of 1986, ways and means
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