Election ’08: a look at the candidates

Super Tuesday is over, but the presidential campaign is just beginning in earnest. At press time, here’s where the candidates stood on key home channel issues.

Each candidate has set forth proposals that could alter the way the home improvement industry does business. Imagining for a moment that candidates’ campaign positions have some chance of becoming policy, in the next four years we could theoretically have the addition of a green building lender—Connie Mae—or the total elimination of the Internal Revenue Service. Those ideas belong to Hillary Clinton and Mike Huckabee, respectively.

The latter issue, eliminating the IRS, has been predicated on the idea of instituting a national sales tax—in Huckabee’s plan, 30 cents on the dollar for consumer purchases. Of course, retail groups have bristled at the idea of a national sales tax as being unnecessarily burdensome on business owners.

“We’re certainly not in favor of a national sales tax, but we’d certainly be in favor of something that leveled out sales tax in equalities between the states,” explained Drew Alexander, chairman of the International Council of Shopping Centers, at a legislative roundtable held last year.

Some of the changes proposed by candidates are less sweeping but worth noting. The subprime mortgage market meltdown has led to a variety of proposals, on topics from how to help borrowers avoid foreclosure through an expanded NeighborWorks program (Mitt Romney) or setting tougher laws for mortgage fraud through the STOP FRAUD Act (Barack Obama).

The National Association of Realtors is just one group closely watching the candidates’ subprime stances.

  Green building Subprime issues Small business Taxation
Clinton Clinton supports the formation of a new “Connie Mae” program, which would provide incentives for “low and middle-income” home buyers to buy green homes and invest in green home improvements. Advocates the “Save Our Homes” program, which would establish a $1 billion fund to assist state programs that help at-risk borrowers avoid foreclosure. As part of her long-touted health care plan, Clinton supports providing tax credits to help small businesses deal with health care issues. Last year, Senator Clinton voted down an effort to permanently repeal the estate tax and voted “yes” to allowing a capital gains tax cut to expire.
Huckabee While Huckabee supports, as do all the candidates, lessening America’s “reliance on foreign oil,” regarding other environmental initiatives he has commented, “Our free market will sort out what makes the most sense economically and will reward consumer preferences.” Supports the “Hope Now” program and advocates a “second round” of negotiations with subprime lenders on helping families in financial trouble or danger of foreclosure. As Governor of Arkansas, Huckabee supported the ARHealthNet program, which gives small business owners help in providing health care coverage. Huckabee advocates establishing a consumption-based tax, eliminating the IRS in favor of a higher sales tax to be collected at retail.
McCain McCain supports a permanent research and development tax credit, to ensure “innovation is fueled by access to sufficient risk capital”—this specifically includes energy-efficient innovations. At an interview prior to the New Hampshire primary, McCain said he advocates federal help only if it helps individual homeowners but does not “reward speculators and bad actors.” Has expressed support for a plan to cut corporate business taxes from 35 percent to 25 percent as a way of stimulating the economy. “Low taxes on dividends and capital gains promote saving [and] channel investment dollars to innovative, high-value uses,” McCain has said. He supports keeping current tax rates on dividends and capital gains.
Obama Obama wants to set “National Building Efficiency Goals,” including making all new buildings carbon neutral or “producing zero emissions” by 2030. Supports the “STOP FRAUD Act” which would create the first federal definition of mortgage fraud. The act would increase funding for federal and state law enforcement programs to deal with mortgage fraud. Advocates eliminating taxes on investments in start-ups and small businesses, as well as eliminating the capital gains tax on start-up businesses. Last year, Senator Obama voted “no” on an amendment to raise the estate tax exemption to $5 million. Supports raising capital gains tax on high earning individuals.
Romney Romney supports a permanent research and development tax credit, something he calls essential “to win in the global economic competition.” Supports “reforming and expanding” Federal Housing Administration (FHA) loan portfolio limits to allow larger loans to homeowners, as well as expanding NeighborWorks—a national foreclosure-avoidance initiative. Romney has supported instituting an “immediate 100 percent” expensing of new equipment purchased by a business for a two-year period, retroactive to Jan. 1, 2008. Advocates eliminating the estate tax and extending tax cuts on income, capital gains and dividends.

“With the foreclosure rate increasing rapidly, there’s a lot that we’re watching,” said Mary Trupo, a regulatory and legislative issues spokeswoman for the NAR. “We would like to see something aimed at helping the people that are already trapped. It’s a real hands-on, grass roots kind of issue, because it affects the community and it affects the economy overall.”

According to data from Irvine, Calif.-based real estate research firm RealtyTrac, 2007 was a tough year for many more homeowners than 2006. The number of homes in some state of foreclosure was 79 percent higher in 2007 than in 2006, and the number of foreclosure filings—about 2.2 million nationwide—was 75 percent higher year-over-year.

“We do believe that there needs to be better regulation and oversight in the [mortgage] industry,” Trupo added.

The longstanding issue of how best to deal with the estate tax on inheritance has been particularly relevant for businesses like family owned lumberyards and hardware stores. Predictably, support or disdain of the estate tax falls along party lines—McCain, Romney and Huckabee have expressed a desire to eliminate the estate tax. Obama and Clinton have explicitly supported preserving it in some form, with the potential for reforms to protect small businesses.

Affecting small and large businesses alike, the issue of how to regulate “green” building practices will undoubtedly be a central issue for pro dealers, builders and eventually all retailers of environmentally friendly home products. The candidates have widely varying views on the issue, from creating a set of federal regulations on green issues to, as Huckabee has suggested, letting “the free market sort out consumer preferences.” Health care issues also rank high on the candidates’ business plans.

To help you make sense of some of these issues, we’ve compiled a chart (above) of where the candidates stand on issues relevant to the home improvement industry.