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1031 Exchanges Attacked By Dems, GOP, Jeb Bush, Paul Ryan…
by W. J. Mencarow
“Taxation with representation ain’t so hot either.” — Gerald Barzan
If you sell investment property you will have to pay up to 20 percent capital gains tax. You can defer the tax by doing a 1031 exchange (a.k.a. “Starker” or
“like-kind” exchange) for another investment property.
GOP presidential candidate Jeb Bush, many Democrats and the congressional Republican (RINO) establishment want to kill 1031 exchanges.
The plan proposed last year by former House Ways and Means Committee Chairman, Republican Dave Camp, would have killed 1031 exchanges. (I feel
particularly bad about this, since he and I worked together every day as colleagues and good friends in the same Washington congressional office. I even got
him to read The Law by Frederic Bastiat — if you haven't read it, you must! See https://mises.org/library/law)
The tax reform plan proposed by Jeb Bush includes elimination of both 1031 exchanges and the deduction for business interest. The elimination of the
latter threatens firms that are reliant on debt financing. Bush also wants to eliminate the deduction for state and local taxes. The home mortgage interest deduction is also threatened under his plan. Itemized deductions other than charity are subject to a cap of two percent of a taxpayer's AGI. Someone in a lower bracket will be able to have more deductions as a share of their income. Low- and middle- income filers in the 10 percent tax bracket could deduct up to 20 percent of their income, while high-income filers in the top bracket could only deduct about 7 percent.
Those who utilize 1031 exchanges, live in high tax states, have large mortgages or use significant leverage in their businesses might find themselves far behind under the Bush plan or any of the others.
Sources: forbes.com
jdsupra.com
iowafarmer.com
jdsupra.com
iowafarmer.com
What does one expect from politicians? Politics is about power; Republicans and Democrats will do anything to get votes. Both parties ignore economic reality and what is in the best interest of the people plying upon the emotionalism of the masses.