STOP NCAR: Billion dollar industry balks at paying for growth

Thursday, April 19, 2007

Billion dollar industry balks at paying for growth

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Billion dollar industry balks at paying for growth
Posted By Admin On 28th March 2007 @ 16:53

It has become clear in recent weeks that support is building in the General Assembly for legislation to give counties the power to enact a real estate transfer tax to raise money for schools, water and sewer infrastructure, and the other costs associated with the state’s dramatic growth.
Bills have been introduced to give various counties the power to impose the tax on home sales if it’s approved in a countywide referendum. House Speaker Joe Hackney recently indicated that he is inclined to support allowing counties to raise the tax.

But the clearest evidence that this might be the year that lawmakers actually give local governments the revenue tools they need is the ad campaign recently launched against the legislation by the North Carolina Association of Realtors, complete with television commercials and a website, itsabadidea.org.

Realtors normally rely on their well-connected lobbyists and the campaign contributions of their political action committee to have their way in the General Assembly. Realtors gave more than $600,000 to legislative candidates in the 2006 election cycle.

But this year, the realtors may have a fight on their hands to protect their profits and are spending their considerable resources to wage it. The realtors want to talk about the problems they see with the tax itself, which is the basis of their ad campaign.

What the ad and website don’t say is that no legislation seeks to impose the transfer tax. The bills only give counties the authority to consider it and only after the people in the county approve it in a referendum. Apparently the realtors want to prevent people in North Carolina from deciding how to build schools in their own communities.

They also continue to misrepresent the tax itself, calling it a “home tax” that’s punitive and makes it harder for low-income people to being able to afford their first time. The realtors’ campaign is based on convincing people that a transfer tax is somehow a tax on the American dream.

The problem of course is that the American dream also includes adequately-funded schools, police, and firefighters, and water and sewer systems that meet the needs of a community.

The facts about the tax are as clear as the rhetoric. Thirty-seven states have some form of a transfer tax, including Florida, which increased it in 1992 to support affordable housing. In the last nine years Florida’s real estate transactions have more than doubled. Other states with transfer taxes have seen similar trends. The tax doesn’t seem to be hindering housing sales.

If lawmakers want to make sure that lower income homebuyers are not affected, they could simply exempt the first $100,000 of a home sale. Realtors could do their part too. Instead of opposing what is in effect a one percent sales tax on houses, realtors themselves could reduce a much larger cost to home sellers, the 6 percent commission currently taken by realtors.

That would show a true concern for the lower income homebuyers and still allow counties to raise revenue to provide essential services to the families in the homes. And it is clear that realtors could afford it.

The Association’s figures show that the sales of preexisting homes in North Carolina last year totaled $28.7 billion. Add in new homes and the figure is well above $30 billion. But even at $28.7 billion, that means the realtors take was $1.72 billion in 2006.

Realtors admit that many counties need to raise more revenue, but when pressed they say counties should raise the property tax, which can sometimes be a problem for many senior citizens, or simply set better budget priorities, a suggestion almost as disingenuous as their concern for the poor.

The transfer tax is an effective way to raise revenue and counties in North Carolina should have the opportunity to consider it. It’s not an onerous, regressive tax that would hurt home sales and unfairly target lower-income homebuyers. It is a way to make a billion dollar industry help in a small way offset the costs that come as a result of the growth that brings the industry its massive profits.