1031 Tax Reform Update – June 2015
It’s been almost three months since the March 17th release of the Ernst & Young Economic Impact of Repealing Like-Kind Exchange Rules study. The study provides important quantitative analysis which demonstrated that a repeal of Section 1031 would harm both local and the overall U.S. economies, and is at cross-purposes with tax reform.
So, how is this critical information being used by IPX1031®, the FEA and Coalition partners? What benefit is our investment bringing to bear in our fight to preserve Section 1031?
Most importantly, the study is being widely-distributed and cited by IPX1031®, the FEA and Coalition members during our meetings on Capitol Hill and In-District with Members of Congress. A copy of the study and a one-page synopsis have been hand-delivered by FEA representatives to all Members of the Senate Finance Committee and the House Ways & Means Committee.
Dr. Robert Carroll, National Director of Ernst & Young’s Quantitative Economics and Statistics group, and primary author of the study, attended several important meetings with IPX1031®, FEA members and our Coalition partners. Dr. Carroll described the methodology and the results of the study, the conclusions of which are invaluable to our cause.
The study is being used by other associations in their meetings with Congressional leaders. When a Member of Congress hears from many different constituents that their livelihoods would be affected by a repeal of like-kind exchanges, that Member is more inclined to consider the impact of repeal and what he or she can do to preserve Section 1031. Our message is reinforced as many Coalition members talk about the strong points in the study.
Not only are our Coalition partners delivering the study during their visits with Members of Congress, they are using the study results as talking points to prepare their own members for Hill visits. The indirect impact of like-kind exchanges on ancillary businesses (title insurers, escrow closers, realtors, surveyors, appraisers, lenders, contractors, attorneys, accountants, etc.) is a connection that is not universally apparent. This angle has been useful when talking with Senators, Representatives and their staff. Many Coalition partners have never considered this perspective. The ideas and evidence presented in the Coalition study bring great support to our message, and draw attention to these often-overlooked effects of a repeal.
- On May 28th, IPX1031®’s Suzanne Goldstein Baker and Hugh Pollard attended an event for Rep. Bob Dold (R-IL), the newest member of House Ways & Means Committee. HWM Chairman, Paul Ryan was also there. Rep. Dold is a good addition to this committee because he is a businessman who understands the cash flow benefits of 1031. The Congressmen commented that there is much work for the committee to accomplish this summer (international, highway trust fund, trade and extenders) but they have not given up on business tax reform if there is an opportunity. Thanks to several meetings with Reps. Ryan and Dold, they have developed a visible level of comfort with section 1031.
- Suzanne Goldstein Baker prepped ALTA members on the 1031 issue during their fly-in last month and participated in their Hill Visits.
- Suzanne Goldstein Baker also attended the Real Estate Roundtable’s (RER) Tax Policy Advisory Meeting on June 3 in Washington, DC as an invited guest. Dr. Robert Carroll, the primary author of the EY economic impact study, was also invited and presented a brief summary of the results to this group of influential real estate tax professionals.
- Rep. Jim Renacci (R-OH) spoke at the RER meeting. Rep. Renacci is a particularly important member of House Ways and Means because he is a CPA with extensive business experience, not only on behalf of clients, but also as a direct owner of multiple businesses. He brings great practical business gravitas to House Ways and Means. Rep. Renacci commented that he is an advocate for tax reform and emphatically made the point that while much change is needed, Section 1031 is important, needs to be retained and he will fight for it.