The need to upgrade bridges, roads, airports and public transit has been obvious for many years--and tragically illustrated with the bridge collapse in Minnesota last year. It was also part of Obama's economic plan on the campaign trail, so it comes to little surprise that Obama is incorporating infrastructure upgrades into a larger stimulus package. "It would be a good thing for real estate and the nation," says Steve Pumper, executive managing director of Investment Services Group at Transwestern.

What may be more of a surprise to political watchers is that it also appears that Obama is edging away from his earlier positions on taxes as the extent of the economic downturn becomes clearer every day. One oft-cited recipe for fighting recession is that raising taxes during a period of decline is a no-no. Obama's economic advisors have hinted to the media over the weekend that President Obama will not repeal the tax cuts for wealthy individuals earlier than their scheduled 2010 sunset date. Some in the real estate community are hopeful this attitude will be extended to other taxes that Obama has proposed on the campaign trail.

"I think when the time comes, he will also step away from his position on carried interest," an attorney active in commercial real estate deals, predicts to GlobeSt.com. Carried Interest is the percentage of a fund's, joint venture's or limited partnership's profits that a general partner takes as compensation. Such profits are taxed at capital gains rates--15%--as opposed to ordinary income, which can be as much as 35%. Obama has proposed changing the characterization to ordinary income.

"Right now is not the time to look to raise taxes," Pumper tells GlobeSt.com. For instance, he says, while upgrades in infrastructure are clearly needed and would provided a boost to real estate development, sooner or later they will have to be accompanied by an increase in taxes to pay for it. "But I think that will happen further down the road now--at least I hope it will."

The capital gains tax is another area that Pumper hopes will remain untouched for the time being. "Changing it to 28% or 20% would be a huge anchor around the investment community." Pumper says he is cautiously hopeful Obama is cognizant of the dangers of tax increases right now.

"He has made smart decisions in these first weeks," he says, pointing to the apparent selection of New York Federal Reserve President Timothy Geithner as his Treasury Secretary. When news leaked on Friday the market responded very favorably, with the Dow rising some 500 points.

Instant Insights /

Obama's Plan: Promotes Infrastructure, Lays Off Taxes

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