As previously reported by MHI last week and in an “Action Alert” to the MHI-NCC and state associations earlier this week, a tax increase on the “carried interest” earned by private equity managers, venture capitalists and real estate investors now seems increasingly likely as lawmakers head towards a final deal on the “Tax Extenders” bill (HR 4213).
Senate Finance Chairman Max Baucus (D-MT) and House Ways and Means Chair Sandy Levin (D-MI) are pushing to get a tax “extenders” bill to the President’s desk by Memorial Day. While there are favorable tax extensions to the industry in the bill, there is a serious push now being made to increase the tax on “carried interest.” The change is aimed at a provision which allows real estate investment trusts, private-equity firms and other partnerships to pay tax rates on their profits that are lower than rates paid by salaried and hourly workers.
While many believe the tax is only focused on hedge fund managers and the very wealthy, bottom line is that this tax will severely hurt investment in communities, threaten jobs, and particularly will have an adverse affect on smaller developers/owners who are already feeling the ill effects of capital constraints in the marketplace.
Real estate partnerships – and the millions of Americans who live in manufactured home land-lease communities and rely on our industry to provide them with safe, decent affordable housing – will be very adversely affected by such a change. This will be a tax on affordable housing.
Local government officials also recognize that such a drastic tax increase would negatively affect our ability to continue to meet the affordable housing needs of Americans. Both the U.S. Conference of Mayors and the National Association of Counties have recently enacted resolutions expressing opposition to the carried interest tax increase proposal as it relates to real estate partnerships.
MHI is urging its members, particularly state associations and the National Communities Council, to contact members of Congress to oppose any changes to the tax on “carried interest.” MHI is also part of a business coalition that opposes changing the current “carried interest” provision.
MHI members can contact Rae Ann Bevington at firstname.lastname@example.org.