Research released by Ernst & Young LLP on March 17 found that eliminating like-kind exchanges would cause GDP to shrink by $8.1 billion per year - that’s even if the revenue savings were used to cut corporate tax rates. Sponsored by NMHC and the Like-Kind Exchange Coalition, the research also reveals that overall investment would fall by $7 billion, and labor income would slide by $1.4 billion, each year.
Like-kind exchanges enable the multifamily industry to efficiently distribute capital to enhance portfolios, realign property to improve operations and manage risk. But proposals by President Obama and Capitol Hill lawmakers to curb or eliminate like-kind exchanges would have a harmful effect on the value and trading of property.
This research is part of a multi-pronged effort to help ensure that the multifamily industry can continue to rely on like-kind exchanges. NMHC/NAA are also engaged in the following additional activities as part of this strategy:
- Commissioned upcoming research in partnership with an industry coalition that examines the vital role like-kind exchanges play in commercial real estate. The research will include multifamily and is expected later this spring.
- Initiated a wide-ranging outreach effort that is designed to target members of Congress in their states and districts. Our members have met with Senate Finance Committee Chairman Orrin Hatch (R-UT), Finance Committee member Dean Heller (R-NV), and Ways and Means Committee member Dave Reichert (R-WA) to explain how like-kind exchanges have benefited projects in their areas.
- Joined in a letter to the leadership of congressional tax-writing committees asking that like-kind exchanges be kept in any legislative overhaul of the tax code.
The next steps on Capitol Hill on tax reform are uncertain. Finance Committee Chairman Hatch and Ranking Member Ron Wyden (D-OR) have established five working groups charged with making recommendations on overall tax reform by the end of May. On the House side, Ways and Means CommitteeChairman Paul Ryan (R-WI) has said that legislation would have to move by August recess if reform is going to happen this year.