The Obama Administration released a framework on February 22 to lower the corporate tax rate from 35 percent to 28 percent. While lacking specifics in many areas, the Administration’s proposal, if enacted, could have a significant negative impact on multifamily firms.
Broadly, the Administration seeks to eliminate a number of credits and deductions viewed to benefit specific industries while retaining others that contribute to broader business and economic growth. However, more specifically, the White House proposed financing the cost of the rate cut by taxing carried interest at ordinary income rates and asked lawmakers to choose between forcing certain large partnerships to pay tax at corporate rates, reducing the deductibility of business interest and revising depreciation schedules.
NMHC/NAA are working closely with Congress to ensure that policymakers take a holistic approach to tax reform, balancing changes to both business and individual tax codes. We continue to support a stable tax code that promotes investment in rental housing without unfairly burdening apartment owners and renters relative to other asset classes. (For more information, visit http://www.nmhc.org/goto/TaxPolicy.)
The White House’s proposal likely will stimulate much discussion on Capitol Hill, particularly as more details emerge. While the proposal represented a critical first step in overhauling the nation’s tax code, it is unlikely lawmakers will address tax reform before 2013 given the political forces at work during the 2012 election year.