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 WASHINGTON, April 27 /PRNewswire/ -- Punitive federal tax laws toward real estate have eroded local property values and caused a decline in the quality of services communities provide, a U.S. Congressman said here Saturday during a session at the National Association of Realtors' mid-year legislative meetings.
 About 75 percent of a community's services are funded by property taxes, so when properties are devalued and the property tax base is reduced, the quality and extent of community services such as law enforcement, schools and health care, decline dramatically, according to Rep. Jim Moran (D-Va.).
 Moran, a member of the U.S. House Banking Committee, addressed the Realtors' Legislative Committee about the importance of healthy real estate markets and the direct affect they have on the standard of living for families and communities, during the association's Mid-year Conference and Trade Exposition. More than 5,000 Realtors and guests are attending the April 24-29 meetings.
 "There are certain industries we are more reliant on for a healthy economy and improved living standards, and real estate is one of the most intrinsic ones," said Moran. "The American people do not yet fully understand the connection between a thriving real estate industry and the economy. We must educate the public, who then must educate Congress and the administration," he said.
 Moran said he doesn't know any area of the country that isn't dependent upon the health of its real estate markets. He said the average American may not relate to many of the technical aspects of real estate, "but what they do relate to is the safety and quality of their neighborhoods and schools. People have to understand that it's their quality of life at stake."
 In 1981, Moran explained, the federal government began cutting off aid to state and local governments for funding of community programs. As a result, localities became increasingly reliant on property taxes for the community services they offered. "The programs that are most important to people at the local level, are almost completely dependent on property taxes," he said.
 According to Moran, the 1986 Tax Reform Act included at least 20 different ways to punish real estate, the biggest penalty being the treatment of passive losses. Unfortunately, Congress didn't realize that changing these laws would reduce the value of commercial real estate by as much as 20 percent, which exacerbated the savings and loans crisis, and ultimately led to the recession, Moran said.
 As a result of the problems centered around failed commercial real estate projects, banks have stopped making real estate loans, which has further hurt the real estate industry and local economies. Some lawmakers say that the banking industry is getting back on its feet, but Moran said this is not true. "Banks are still not making the necessary loans for real estate to get this economy back on track. Because real estate has always led recoveries, we must take the necessary risks," he said.
 Moran discussed some of the tax bills recently considered by Congress this year, but said the outlook for tax legislation in 1992 is dim. He said both President Bush and Congress are to blame for the stalemate that has occurred.
 However, Moran noted that significant changes in the tax code are imperative and needed soon. "In order to resume economic growth in this country, we must undo the effects of the 1986 Tax Reform Act, which singled out real estate, and restore value to residential and commercial real estate markets."
 The National Association of Realtors, "The Voice For Real Estate," is the nation's largest trade association, representing more than 750,000 members involved in all aspects of the real estate industry.
 -0- 4/27/92
 /CONTACT: Lois Clinton of National Association of Realtors, 202-328-5686 until April 29, or 202-383-1016, after April 29/ CO: National Association of Realtors ST: District of Columbia IN: SU:

DS -- DC006 -- 2980 04/27/92 09:25 EDT
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Publication:PR Newswire
Date:Apr 27, 1992

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