Published: May 14, 2008
State legislators have looked at a lot of election results over the past week. Now that their 2008 session is under way, they should investigate closely the public's vote on the real-estate transfer tax.
The tax is essentially a local-option sales tax charged to sellers of real estate. Although several counties already charge the tax based on local-bill authority granted years ago, every county that has tried to implement the tax under 2007 legislation has failed miserably. On primary-election day, voters in four more counties said no.
As the Journal has said repeatedly, the tax is both unfair and unwise.
The tax is unfair because it singles out a small portion of the population for a large tax burden. The money raised is then used for general public needs. In most cases, the tax would be used to pay for school construction or other infrastructure.
That's not fair. If a county needs schools or new water lines, then all taxpayers in the county should share the cost, because all taxpayers benefit from good schools and clean water.
Backers of the tax have never been able to explain why they singled out people who were selling real estate for this tax. That's because the only reason is distasteful: Single out a small part of the population and hit it with a big piece of the tax burden. The hope here is that those who will not have to pay the tax will support it as a way of avoiding taxes for themselves. To the credit of North Carolinians, they see this as basically unfair. Most voters probably also understand how the tax could hit them when they sell their homes.
The tax is also unfair because it is based on sales price, not profit. That's also the reason it is unwise public policy.
The national housing crisis has reached North Carolina. Houses are sitting on the market unsold. When houses do sell, sellers are getting lower prices. Many sellers are stuck with houses that are worth less than their outstanding mortgage.
While Congress and the president look for ways to get the country out of this housing crisis, North Carolina would only add to it with the imposition of these real-estate transfer taxes. Imagine having to sell a home at a loss and then getting a big bill from the county that only makes that loss worse.
That's what the real-estate transfer tax does.
There will be efforts in this legislative session to repeal the tax, and legislators should do so. The tax would hurt the young family caught in a house it can no longer afford. It hurts the elderly who sell their houses to raise the money to pay for assisted living or nursing-home care.
This is an ill-advised tax, and the people of North Carolina have, in referendum after referendum, explained that to government leaders. The legislature should just get rid of it now.