The second half of President Biden’s infrastructure agenda has significant tax implications for the rental housing industry.
On April 28, President Biden unveiled the second half of his infrastructure agenda, the American Families Plan. Released just weeks after the American Jobs Plan, this new proposal is focused on providing educational, child care, family and workplace benefits. Notably, the $1.8 trillion proposal would be financed by significant tax increases that would directly affect the multifamily industry. As outlined below, the proposal would impose steep increases on tax rates and capital gains while eliminating carried interest, curtailing like-kind exchanges and repealing stepped-up basis.
State of Play
Prospects for enacting the American Families Plan are uncertain. Some Democratic members of Congress would like to see the proposal processed alongside the Administration’s previously released $2.25 trillion American Jobs Plan that is focused on traditional infrastructure. However, others would like to first pass a traditional infrastructure package in a bipartisan manner before moving to a second proposal.
Additionally, it is unclear that all Democrats would support the Administration’s proposed tax increases, which Republicans are likely to unilaterally oppose. With their narrow majorities, Democrats will have little margin in the House and no margin in the Senate to approve extraordinarily significant revenue increases. Given this political reality, many of the Administration’s proposals may need to be modified to win approval or will end up being dropped. As Congress moves forward, NMHC and NAA will continue to educate policymakers about the key role these tax provisions play in the multifamily industry.
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