Industry associations say no to tax hikes
The National Association of Home Builders said that it does not support proposals that would increase the Net Investment Income Tax (NIIT).
The NIIT is a 3.8% surtax on income, such as capital gains, interest, rental and royalty income, and dividends.
In a statement issued by the NAHB, the association said it is in “strong opposition” to the tax increases, noting that it would lead to increased housing costs while putting more pressure on rents at a time when housing affordability is a crisis.
When the NIIT was enacted as part of the Affordable Care Act, Congress limited its applicability to passive investment income, according to the NAHB. However, proposals in Build Back Better, and recently reported to be under consideration in the Senate, would expand the NIIT to include active investment income.
NAHB Chairman Jerry Konter addressed the concerns in a letter to leaders in Congress.
“Subjecting active business income to the NIIT will result in higher housing costs … particularly for renters,” Konter wrote.
“Multifamily property owners are facing the same financial stresses as any home owner. Operating costs are rising. Higher interest rates increase development and rehabilitation costs. Rising real estate values often translate into higher tax appraisals resulting in higher property tax bills … Along with ongoing demand for rental housing, these inflationary pressures are translating into higher rents,” the letter continued.
“Expanding the NIIT to include active investments has the same financial effect on property owners as increasing operating costs. If Congress moves forward with this proposal, property owners will have no choice but to pass some, if not all, of the tax burden on to their tenants.”
During a time when home prices and rents are rising faster than inflation, Konter has urged Congress to focus on solving the housing affordability crisis by removing barriers and not creating new hurdles.
Associated Builders and Contractors has also told Congressional Democrats to not raise taxes on small, individual and family-owned businesses as part of any effort to enact a partisan reconciliation bill.
“This destructive, partisan process that Congressional Democrats are following in attempting to pass a reconciliation bill would have a devastating effect on the construction industry and our nation’s economy,” said ABC Vice President of Legislative and Political Affairs Kristen Swearingen. “As countless, if not all, businesses are facing rising costs, supply chain delays and high gas prices, adding a reported nearly 4% tax increase that would take $200 billion out of the pockets of small contractors and other critical American businesses would make it even more difficult for the backbone of America’s economy to maintain operations.
ABC and the National Lumber and Building Material Dealers Association are among hundreds of organizations representing millions of businesses employing tens of millions of American workers that send a letter to congressional leaders opposing passage of an eleventh-hour, partisan tax and spending bill on July 11. The NAHB was among the organizations that signed the letter.