The debate over tax cuts enacted in 2001 is expected to heat up when the U.S. Senate reconvenes in September after its summer recess. The maximum tax rate on capital gains and dividends will revert from the current 15%, a 70-year low, back to 20% on Jan. 1, 2011, and commercial real estate experts are beginning to speculate on the impact that reverting back to the higher rates will have on the still-fragile economic recovery.

The likelihood of higher marginal and capital gains and dividend taxes, along with the impacts of health-care reform, financial regulatory reform and proposed changes in the way investment and leasing income are accounted for, has been a major preoccupation of the real estate industry in 2010. As the stretch run for the mid-term election campaigns unfolds, however, with the national unemployment rate stalled at around 9.5%, many Republicans and U.S. businesses are wasting no time in calling on President Obama and the Democrat-controlled Congress to extend the capital gains tax cuts for all income brackets, including families earning at least $250,000 a year.

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