Business interests, including commercial real estate, are reacting strongly to the renewed possibility of higher capital gains taxes, which has long been the target of tax reformers but whose defenders have managed to keep in the tax code.

On Thursday, the Senate Budget Committee passed a resolution that provides recommendations to other committees regarding the $3.5 trillion budget plan. Among other proposals are increasing the top capital gains rate from 23.8% to 43.4% on individual taxpayers with income over $1M, or $2M for couples. That would presumably include taxes on the income general partners receive, known as "carried interest."

In anticipation of such a proposal, the U.S. Chamber of Commerce released a study last week about the impact of a capital gains tax increase. Among other things, the report predicts a job loss of 4.9 million, a drop of $96B in tax revenues and a loss for pension funds of as much as $3B.

"Private equity funding provided a lifeline to thousands of American businesses and real estate partnerships that are crucial for new home construction and affordable housing," U.S. Chamber Center for Capital Markets Competitiveness Executive Vice President Tom Quaadman said in a statement.

"Almost doubling certain taxes on private equity and venture capital investments will restrict access to capital, harming job creation and innovation," Quaadman said, making a familiar argument, one that has been made by such organizations as The Real Estate Roundtable as well.

Main Street Employers, a coalition of 120 trade groups, has published an open letter in response to the Senate resolution. A number of real estate-related organizations signed the letter, including ICSC, The Real Estate Roundtable, International Warehouse Logistics Association, National Association of Home Builders, National Grocers Association and the Asian American Hotel Owners Association.

"The Main Street Employers coalition strongly opposes the Senate budget resolution released today," the letter says. "The resolution calls for $1.75 trillion or more in higher taxes in the coming years."

The letter was addressed to U.S. Rep. Richard Neal, a Democrat from Massachusetts who chairs the House Ways and Means Committee, which now takes up the budget resolution. In a statement on Thursday, Neal said that the federal government’s support during the coronavirus pandemic served to “keep small businesses afloat.”

“Over the coming days, we will consider recommendations that make smart investments to protect Americans’ health and to strengthen our economy in a way that grows the labor force, empowers working families and tackles the worsening climate crisis," Neal said.

The budget bill itself hasn't been written yet, and there is no guarantee that any specific tax proposal will make its way to the final version of the bill. There is also no guarantee the bill will pass, since it will depend on every Democrat in the Senate and almost every House Democrat voting for it.