Few Tax Reforms Expected from Candidates
Lewis, Constance, THE JOURNAL RECORD
For the real estate industry, beset with tax law changes, uncertainties of interest rates and high vacancy rates - problems which have only been compounded in the oil depressed regions of the Southwest - only one thing is certain:
There will be no additional tax law changes until after the presidential election in November.
"But what can we expect after a new president is elected?" questions James B. Werle, a tax and development specialist with the international accounting firm of Arthur Young & Co., which has an Oklahoma City office.
Examining the party planks of George Bush and Michael Dukakis, Werle sees no push for tax reforms or incentives that will help the real estate industry. But both candidates "appear to have indicated at least moderate support for real estate's `social credits' - low-income housing and historic rehabilitation credits," he said.
"In order to initiate new programs or incentives, something else will necessarily have to be taken away," he said, explaining that the candidates, whose chief concern is balancing the budget, are hard put to advocate tax reform measures that would require some form of governmental support.
The concern for low-cost, adequate housing and historic rehabilitation credits is a response to public pressure, he said.
Dukakis has selected "affordability of quality housing" as a plank in his party's platform, indicating he would redirect defense spending to fund programs, said Werle.
"Dukakis looks to the success of his home state in combining the efforts of developers, trade unions and other members of the private sector in programs with local government as a means of succeeding in achieving this goal," he said.
But while the availability of low income housing is one of Bush's platform planks, he has "not said word one" as to how he would accomplish that aim, Werle said from Arthur Young's Florida offices during a telephone interview on the second day of the Republican convention.
"Bush has mentioned nothing in the way of affirmative action (he would take)," Werle added. "So, I think we can expect his posture to reflect the status quo of the Reagan administration."
Werle, himself a Republican, said he nevertheless saw the party using "mom and apple pie" rhetoric and not attacking the specifics of many issues, including real estate.
However, in crediting Dukakis with a concern for the rising cost of constructing new homes, increases in rental rates and the building industry's emphasis on "upper end luxury" homes in the majority of states, Werle also pointed out that Dukakis is not making promises he can't keep.
"Dukakis has learned from prior gubernatorial races that promises are hard to keep and, therefore, is making few," said Werle. "His programs are moderate and do not commit to increased taxes or large spending programs."
Citing the possibilities that could occur if Dukakis enters the White House, Werle said, "look to incentive programs for the lower end of the residential real estate market (both multi-family and single family) and status quo for the remainder of the market."
In the telephone interview, Werle also predicted that the influence of Jesse Jackson will weigh heavily in low income housing since that is one of "visionary" Jackson's favorite issues, and the Democrats "will make concessions to him" in lieu of not nominating him to the vice presidenial candidacy.
"If Bush is elected," Werle said, "expect him to pick up on Reagan's recent statement that he wants to see a reduced capital gains rate.
"Since it is likely Bush would have a Democratic Congress, tax proposals for rate increases, changes in depreciation systems and interest deductions and additional tightening of the passive loss rules, can be expected with strong opposition for the rate provisions of such proposals. …