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NAR PRESIDENT EXPRESSES SUPPORT FOR DEMOCRATIC TAX PLAN H.R. 4287

NAR PRESIDENT EXPRESSES SUPPORT FOR DEMOCRATIC TAX PLAN H.R. 4287
 WASHINGTON, Feb. 24 /PRNewswire/ -- Dorcas T. Helfant, president of the National Association of Realtors, today sent a letter to all members of the U.S. House of Representatives expressing support for the Democratic tax plan, H.R. 4287, which is expected to go to the House floor for consideration this week.
 The text of the letter from Helfant to the House members follows:
 The National Association of Realtors seeks your support for the Democratic alternative economic tax proposal that will be offered on the House floor during the week of Feb. 24.
 NAR believes the Democratic alternative will best enable the housing and real estate industry to lead the nation on the path to economic recovery. First, the Democratic plan contains the major elements of H.R. 1414, the passive loss corrections bill co-sponsored by over 325 members of the House, designed to stabilize rental real estate values and restore tax fairness for real estate professionals.
 NAR maintains that the current passive loss rules, enacted in 1986, have led significantly to the steady erosion of rental real estate values, contributed substantially to the S&L crisis costing billions of taxpayer dollars, and in the process, given us the Resolution Trust Corporation. The Democratic proposal provides real estate professionals with reasonable incentives to hold on to troubled properties and to purchase existing properties that they did not develop, including those held by the RTC and FDIC. The president's proposal (also contained in Michel/Archer) is so narrowly drawn that few real estate professionals would qualify. In addition, the president's plan provides no incentives or rationale to purchase existing properties currently held by the private sector and federal government. We believe it is important to emphasize that the proposed change (i.e. H.R. 1414) included in the Democratic alternative would leave intact at least 10 provisions adopted in 1986 specifically designed to eradicate the potential for abusive tax shelters.
 Secondly, the Democratic capital gains proposal maintains current law for properties purchased before Feb. 1, 1992. For properties purchased after this date, only gain in excess of inflation would be taxed. The president's proposal contains a retroactive provision -- full depreciation recapture -- that would result in a $5.4 billion tax increase on housing and real estate. NAR feels strongly and without reservation that the industry cannot endure the burden of yet another tax increase. Further, we would point to 1986 as evidence that retroactive provisions wreak far more long-term damage to our economy than any short-term benefit they may provide, such as serving as a revenue source for stock churning on Wall Street. In addition, retroactivity erodes public trust in government, and at a time when we are attempting to encourage investment in real estate, Congress should not take action that would further erode public confidence and faith in our federal government.
 The Democratic alternative also provides certainty to housing programs that have proven successful, by permanently extending the low-income housing tax credit and mortgage revenue bonds. Also, restoring the viability of IRAs and elevating their status as a tool for first-time home buyers is an important element in both the president's plan and the Democratic proposal. However, only the Democratic alternative acknowledges that it is the more established members of our society who have accumulated significant savings in their IRAs, and, as a result, allows parents penalty-free withdrawals to provide their children the down payment for a first-time home purchase.
 In addition, NAR strongly supports the $5,000 first-time home buyer tax credit contained in the president's proposal which unfortunately is not included in the Democratic alternative. We believe this credit would create jobs, increase housing starts and provide a healthy stimulus to our economy. NAR was disappointed this tax credit was not included in the Democratic alternative and will work diligently for its inclusion in the final package approved by Congress.
 Notwithstanding the absence of the first-time home buyer tax credit and some other improvements we would like to see in the capital gains and passive loss areas, NAR believes that on balance, the Democratic alternative represents a strong first step in correcting the structural, statutory flaws that have plagued our industry and undermined our economy for the past six years.
 Therefore, we urge your support for the Democratic alternative on the House floor.
 -0- 2/24/92
 /NOTE: National Association of Realtors and NAR are registered trademarks./
 /CONTACT: Lois Clinton, 202-383-1016, or Liz Duncan, 202-383-1043, both of the National Association of Realtors/ CO: National Association of Realtors ST: District of Columbia IN: SU: LEG


DC-MK -- DC029 -- 2085 02/24/92 17:19 EST
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Date:Feb 24, 1992
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