It’s Still a Bad Idea…

Over the past few months and recent weeks, a battle was being waged in the state capitol over a proposed “transfer tax” increase that would impact homeowners when they sell their property. Currently, the state imposes upon the seller a $2 per $1000 of gross price tax, paid at the closing of the transaction. The new proposal, which was adopted by the Democrat-controlled state legislature, allows counties to increase the existing tax as a way to raise money, allegedly for schools and roads. The county government can actually choose between a sales tax increase or an increase in the transfer tax on real estate. Either choice would need to be approved by the voters of the county in question.
During the proposal’s discussion in Raleigh, I exchanged emails with Rep. Thom Tillis, expressing my agreement with him that the transfer tax is a bad idea. Rep. Tillis fought hard to defeat the proposal, but minority parties generally do not get to set policy. Below is some of Tillis’ argument against the transfer tax:
“there is no guarantee (and, in fact, a high likelihood to the contrary) that the funds will be spent on schools in the areas where the real estate transfer taxes are being collected. There is also a fundamental issue related to fairness with respect to real estate transfer taxes. The real estate transfer tax imposes an additional tax on a subset of citizens who are already paying the lion’s share of the tax bill in the County—property owners. Moreover, it imposes a tax on people who may actually be lessening the burden on our schools and roads. For example, single persons or newlyweds buying their first home, empty nesters moving to smaller homes, senior citizens moving to seniors-oriented communities, and dual-income-no-children professionals. Land transfer taxes would produce more revenue for the County, but there is no stipulation as to how it is spent. In the case of Mecklenburg County, it could be spent on a minor league baseball stadium or some other “priority” not related to schools.”
I believe that good stewardship of the taxes already being collected is a better way to address road and school issues. And if more revenue truly is needed, I prefer an increase in the sales tax, where revenues are driven by spending across all sectors, according to the amount of expendable income. More affluent taxpayers will contribute more dollars by virtue of their ability to spend. Don’t confuse that comment with taxing the rich. Sales tax is by nature an equitable tax to all. Higher income tax percentage burdens based on higher incomes is liberal redistribution of wealth. Big difference.
Anyway, whether you are a homeowner considering selling your home, or you are considering buying a home, a transfer tax increase will cost you both. If you see this referendum appear on the ballot in your county, I urge you to vote against a real estate transfer tax increase. Let’s all do what we can to keep homeownership affordable in North Carolina.
If you are a resident of Mecklenburg County, and want to reach Rep. Thom Tillis, his email address is If you live elsewhere in NC, find out who your representative is, and let him or her know where you stand.


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