Thursday, December 1, 2011

What Super Committee Failure Means for CRE

BOMA San Francisco Members:

Before the Thanksgiving holiday, the efforts of the Joint Select Committee on Deficit Reduction (the Congressional Super Committee) to identify $1.2 billion in spending cuts and revenue raisers ended in the partisan gridlock that has plagued the 112th Session of Congress since its beginning. Now, Congress is scrambling to resurrect its tax agenda and soften the effects of the mandatory spending cuts that will be automatically triggered by the committee’s failure beginning in 2013.

As early as Friday, December 2, 2011, Congress could vote on legislation to extend the social security payroll tax cut implemented last year; however, unsurprisingly, Congress cannot agree on how to pay for it. Democrats favor a surtax on income in excess of $1 million a year, while many Republicans would like to consider some of the spending cuts that were identified by the Super Committee, such as a salary freeze for federal workers.

In addition, individual and business tax breaks totaling approximately $55 billion will expire at the end of the year, including the 15–year depreciation period for leasehold improvements, which absent Congressional action will revert back to 39 years on January 1. Also included of interest to BOMA members is the brownfield remediation provision that allows owners to write–off brownfield remediation costs in the year they are incurred instead of at the time the property is sold. BOMA and our coalition partners have been working to press Congress to take immediate action on the extenders package.

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