Builders Make Great Case For Transfer Tax

BubbleIt is generally accepted that the housing bubble precipitated the current recession. Easy access to money and low interest rates fueled housing inflation that made housing speculation profitable without growth in the underlying economy. In 2007 the Chief Executive of the National Association of Homebuilders acknowledged that overbuilding during the boom years was a factor in the housing meltdown.

That same year NC Realtors and Homebuilders fought tooth and nail at the Legislature to prevent counties from having a transfer tax option to pay for the infrastructure demanded by housing growth. Although unsuccessful at the Legislature in 2007 they have since spent millions to defeat transfer tax proposals at the polls in local referendums.

Proponents of the transfer tax argue that it relieves some of the burden of property tax by deferring it until a sale when cash flow is available, especially for existing homeowners on fixed incomes with over-inflated home values. Realtors and Homebuilders argued against it saying "Fight the Home Tax - It's a Bad Idea". Now faced with unsold inventories of speculatively built houses NC Homebuilders have turned to the Legislature for relief from "some of the burden of property tax by deferring it until a sale when cash flow is available."

House Bill 852, "Defer Tax on Builders' Inventory", has sailed quietly through the House, 106 votes to 8, and through committees, and is calendered for a Senate vote Wednesday July 8th, with little opposition expected. In fiscal years 2010-11 and 2011-12 combined this bill is projected to have a negative effect on county and municipal revenues of $40-$45 million.

"A builder may defer the portion of tax imposed on real property that represents the increase in value of the property attributable solely to improvements resulting from the construction by the builder of a residence on the property."

Homeowners will find no such relief and local governments will have to cut services or raise revenues to make up the $40-$45 million shortfall. Realtors and Homebuilders have argued that taxing the equity in homes is a bad idea but now they argue that "It's a Good Idea" when it comes to builders who overbuilt in the boom years straining infrastructure and local revenue streams. The NC Homebuilders make a great case for the transfer tax.

 

Comments

Wow, Greg

Now we're bailing out the builders who never wanted to pay their fair share in the first place.



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Vote Democratic, the ass you save may be your own.

Lien on me

And we're bailing out those losing money on speculation.

I feel sorry for unpaid subcontractors & vendors whose only leverage is a lien on the property. A lien only works when it prevents an imminent deed transaction. They get to stand in line and wait with the county to get paid if and when the property sells.

Builder bailout

The bill just passed the Senate 44-2 with no debate

Clearly...

the legislature needs a good house cleaning. Only ten members of the entire legislature voted against this obvious sell-out to the most powerful lobby in the state.

Only Legislators who voted against this crap

Noes: Senator(s): Bingham; Rouzer
Representative(s): Daughtry; Haire; Harrison; Insko; Jackson; Langdon; Sager; Tolson

All I can figure from the results is that all who voted in favor are either bought and paid for by the Homebuilders or too stupid to realize that local governments are having a hard time making ends meet during this crisis.

By the way, BY LAW, local governments had to have their budgets adopted by June 30. The Legislature has still not come up with their budget, which very much affects the budgets of the local governments which had to guess at what they'd be getting from the state.