NC Association of Realtors Executive Vice President's recent letter to the editor as published in the News & Observer on June 16, 2007:
The effort to impose a 1 percent tax on home sales isn't gaining much traction in the General Assembly. As a result, real estate transfer tax advocates like Chris Fitzsimon ("Something to gain in a transfer tax," June 9 op-ed article) have resorted to bogus, mean-spirited attacks on the 43,000 members of the N.C. Association of Realtors.
"The Realtors have but one objective, to protect their profits that in 2006 added up to at least $1.72 billion," he wrote. That's blatantly wrong on several fronts.
First, the sole objective of North Carolina Realtors is to protect the affordability of housing for the average North Carolinian. In the Triangle, a police officer is paid $18 an hour, yet it takes an hourly wage of $25 to afford the average Triangle home. If the proposed home tax passes, it increases the likelihood that vital service workers in Raleigh will have to drive to cities an hour away to find a home they can afford.
Secondly, Fitzsimon appears to derive his $1.72 billion "profit" figure through a series of illogical conclusions. Existing home sales in North Carolina totaled $28.7 billion in 2006. He incorrectly assumes a 6 percent commission -- industry analysts say the average is 5.1 percent. But from his fuzzy math, Fitzsimon claims a $1.72 billion profit. Huh?
There's a big difference between income and profit. Assuming an average income tax rate of 28 percent, North Carolina Realtors paid $481 million in taxes during 2006. After taxes and business/marketing expenses, Realtors had a net average income of $28,000. And is it really "profit" when that money is used to pay a mortgage, utilities and living expenses, plus health insurance?
That's right, health insurance. Realtors are independent contractors. They receive no paid vacation, no long-term disability, no retirement benefits, etc. They make only what they earn by providing a professional service. The public places a high value on that service, and understandably so.
Here's some more bizarre logic from Fitzsimon. He wants the government to use the proceeds from a 1 percent home tax to "invest in affordable housing," among other things. So he wants to provide affordable housing by making housing less affordable?
Lastly, Fitzsimon claims that a transfer tax would "help pay for the costs associated with the growth that brings the Realtors their profits."
Again, that's wrong. It's a tax that would take thousands of dollars from people who already live here and simply are trying to sell their homes. People sell their homes for many reasons. Among them are seniors who need to downsize and military members facing deployment. Then there are personal hardships, such as divorce or a job loss.
A real estate transfer tax would be unfair to homeowners. It's simply a bad idea. I can accept that some feel otherwise. What I can't accept is an unwarranted and unfounded attack on the character of North Carolina real estate professionals.
Tim Kent
Executive Vice President
N.C. Association of Realtors
Greensboro