Of course, there's no right answer to that question. But when you step into the voting booth next month, you'll want to have a good idea of what the candidates' party platforms say about key industry issues. The platforms lay out the policy goals of the parties and help guide the positions of their respective candidates and lawmakers.
Both the Republicans and the Democrats, at their national conventions this summer, adopted platforms that back moderate, pro-business policies. But the parties have very different ideas about economic issues, such as taxes and local growth, that are key to maintaining healthy property sales. They also have different approaches for how to achieve core real estate aims, such as upholding private property rights, enforcing fair housing law, and developing affordable housing.
To both parties, some issues are held to be almost sacrosanct: maintenance of the mortgage interest deduction and the outlawing of online data piracy, both of which are central issues for the National Association of REALTORS. Both the Republican and the Democratic platforms contain planks protecting the MID and making some form of database protection a national priority.
The main differences revolve around how the parties would foster a healthy business climate.
Lower taxes, growth incentives
The Republicans would aim for continued robust real estate markets by putting more money in people's pockets to keep sales demand strong. Their strategy for getting there starts with lower personal taxes. Their party platform calls for cutting the top rate on personal taxes from 39.6 percent of gross income to 33 percent and for reducing the existing five tax brackets to four, each with a lower rate.
They would also cut capital gains taxes and eliminate estate taxes. This latter objective legislators almost pulled off at the end of August, with passage of a bill that would phase out estate taxes over 10 years. But President Clinton vetoed that bill on the ground that total elimination is too costly for the federal government and favors wealthy households.
The Republicans would also fuel demand on the low- and moderate-income side by creating a downpayment assistance fund and streamlining an existing program that lets households apply federal rental assistance toward homeownership.
On the supply side, the Republicans would seek to spur development by encouraging localities to eliminate zoning and regulations that drive up housing costs; addressing brownfields cost and liability issues that impede in-fill development; and creating a homeownership tax credit for development of housing that's affordable to low- and moderate-income households.
They would remove disincentives to entrepreneurs by backing private-property rights and approaching environmental issues in a market-based way. Such a market-based approach would mean, for example, using so-called mitigation banks for wetlands development, which would enable developers to mitigate wetlands losses through creation of wetlands in other locations. On private-property rights, Republicans would be strong enforcers of the Fifth Amendment "takings clause," which requires just compensation to owners when their private property is taken off the market for, or its value is affected by, a public purpose.
Targeted tax cuts, growth planning for 'livability'
The Democrats, led by the "New Democrat" philosophy of which Gore (along with President Clinton) is one of the original adherents, also would strive to create a market-friendly business environment. But their approach would be much different. The tax cuts included in their policy platform would be targeted to achieve certain policy aims, such as getting people to buy houses close to public transportation or houses that meet energy efficiency standards. They'd plow surplus tax receipts into national debt reduction. This would help spur real estate demand by helping to keep interest rates low.
The Democrats would also keep demand strong by encouraging homeownership among traditionally underserved populations. They point to a number of tools by which they would achieve that, including strong enforcement of existing Fair Housing and Americans with Disabilities acts; fighting back attempts to water down the Community Reinvestment Act, the anti-redlining law that requires financial institutions to make housing and small business loans in all areas in which they operate, including low-income areas; and increasing the amount of tax-exempt bond authority to states and localities. That authority is used in state and local mortgage revenue bond and mortgage credit certificate programs, both of which are used for affordable homeownership.
On the supply side, they would push for the "New Markets" tax credit, which would provide tax incentives to developers and investors to rebuild blighted urban and rural areas through development of housing, businesses, and infrastructure. The Republicans also support the initiative, which passed the House earlier this year.
On local growth issues, the Democrats take the same position as the Republicans that localities must be left to make their own decisions on planning, zoning, and land preservation. But unlike the Republicans, the Democrats would invest almost $10 billion in federal funds to encourage localities to plan growth with "livability" issues in mind. Under the growth plan championed by Gore, tax credits and tax-exempt bond funds would be made available to states and localities to help them finance regional planning activities; buy land to create greenbelts, preserve open space, and maintain parks; and bring local residents into the planning process more.
With both parties touting economically moderate policies, you'll have to look at the details of their respective plans to decide which would be the best for real estate.
Election day is Tuesday, Nov. 7. More information on the Democratic and Republican party platforms is available from NAR at www.onerealtorplace.com [1]. Search "party platform" for the parties' real estate-related planks and "tax positions" for the candidates' tax proposals.
Links:
[1] http://www.onerealtorplace.com
