November 2011
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18 Real Estate Associations Tell the Super Committee "NO" on Carried Interest Tax Rates

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Believing there is power in numbers, BOMA International joined with 17 other, national real estate organizations to urge the Super Committee now charged with cutting $1.5 trillion from the federal budget deficit to reject calls for a tax hike on partnership carried interest. (BOMA/NY successfully joined with fellow BOMA members nationwide last year to advocate against carried interest tax provisions.)

In a letter to Senator Patty Murray (left) and Representative Jeb Hensarling (below), co-chairs of the Joint Select Committee on Deficit Reduction, as the Super Committee is formally known, the real estate community made its case as follows:

"It seems some in Congress think that dramatically changing the tax on "carried interest" would only affect hedge fund managers, In fact, the tax increase would squarely hit commercial real estate, since 46% of all investment partnerships in America and real estate, and the vast majority of them use a carried interest structure."

"Further, Congress continues to use the characterization of carried interest as a ‘tax loophole.' This couldn’t be farther from the truth....Carried interest has been a way to reward the general partner in a real estate venture for taking on the countless risks and liabilities...such as potential environmental concerns, operational shortfalls, construction delays and loan guarantees. No matter how it is spun politically, raising taxes on carried interest is bad for the entrepreneurs and small businesses that need capital to innovate, grow and support jobs."

The Super Committee, which is working behind closed doors, must develop a plan by November 23rd and send it to both houses of Congress for a yes or no vote by December 23rd. If no agreement is reached, automatic and often major cuts in Medicare and defense spending will go into effect.