Winston-Salem Journal
Friday, April 6, 2007
North Carolina's realtors constitute one of the state's most powerful political groups. With many educated, affluent and politically active members, the N.C. Association of Realtors can bring much force to bear on issues at the General Assembly. It did so several years ago in getting the first day of school pushed into late August, and it is now trying to block property-transfer taxes.
It is not the power of the realtors that should convince legislators, however, that these taxes are a bad idea. It is the impact the tax will have on less affluent, often retired and young people that should sway legislators to either reject or significantly alter the concept behind a property-transfer tax.
These taxes are a sales tax on real property. A number of different bills proposing such taxes are in the hopper this year. The basic premise is this: When you sell your land or house, you pay a 1 percent tax on the sales price.
Most of the proposals would institute these taxes on a local basis, after a board of county commissioners has voted to do so and the voters have approved. The revenue would then be used to pay for infrastructure needs, most likely schools.
The rationale is that the tax is a levy on growth, that the people benefiting from growth through higher housing prices will then pay for the new schools. It's a rationale that is easy to turn on its head.
The tax is not on growth. The tax is on local people, many of them long-term residents, who are selling their houses. If the state or counties want to tax growth, they should tax either the builders of new units or home purchasers who are not current taxpayers.
The real growth, of course, is coming from new industries that create new jobs here. That is good. But while those growth generators do not pay for the consequences of their expansions, they are often relieved of their tax obligations through industrial incentives. It is a travesty to tax a retired couple on the sale of their home when they have nothing to do with growth, but not tax the entities that are actually profiting from the growth.
The idea of a land-transfer tax for public schools is bad tax policy because it identifies a small group of people and demands that they pay a disproportionate share of the costs of a general social need: the building of schools. It would make for uneven tax obligations, much as toll roads tax some motorists but not others.
There may be ways to direct a new tax at the very agents of growth, at the people who are fueling the demand for new government services. The land-transfer tax does not do so.