BOMA supports efforts to reduce, if not eliminate, taxes on capital gains. Reducing or eliminating capital gains taxes would stimulate prudent investment as well as promote a reasonable expansion of construction activity in the office building industry. The result of such increased investment would be job creation, economic growth and the enhancement of America's competitiveness.
All transactions that involve the sale or exchange of a capital asset result in either a capital gain or loss. By taxing gain on real estate assets, the federal government discourages a range of desirable economic activities: the acquisition and development of commercial properties; lending to finance or refinance investment in those properties; and the employment of skilled workers involved in construction, renovation and remodeling work.
In the spring of 2003, in order to boost the faltering U.S. economy, President Bush signed a stimulus package into law that reduced the capital gains rate from 20 percent to 15 percent (5 percent for low income taxpayers) through 2008. In 2006, Congress voted to extend this tax package, now known as the “Bush tax cuts,” through 2010.
A number of bills were introduced in the 111th Congress that would either temporarily eliminate the capital gains tax or make permanent the current rate. However, no action was taken on any of these. With the 15 percent tax rate set to return to 20 percent at the end of 2010 and the languishing economy, debate over whether or not to extend “the Bush tax cuts” to all Americans picked up steam during the latter part 2010. Ultimately, Congress was able to pass a compromise bill negotiated between President Obama and the Republicans during the “lame duck” session that included a two year extension of the 15 percent tax rate on capital gains for 2011 and 2012. In the 112th Congress, multiple bills to make the 15 percent tax rate permanent were introduced, but no action has been taken thus far.
BOMA International continues to advocate for a permanent capital gains tax reduction or elimination.