Six Percent Versus One Percent

The people who take 6% of the value of a home every time it is bought and sold are opposed to using 1% of the value of a home to pay for roads, sewers and, schools which help to maintain and increase the value of homes and our quality of life.

The virtual monopoly of Realtor®s (who have an actual monopoly on the word Realtor®) is spending thousands of dollars in a multi-media campaign opposed to a nominal land transfer tax. This is puzzling from a number of perspectives.

In North Carolina the provision of public services is largely dependent on property tax, sales tax and income tax. County and municipal governments are largely dependent on property tax and sales tax. Sales tax revenues are volatile and, in many cases, are regressive and only capture 1/3 of commercial transactions. Property tax is the beast of burden for counties and is overloaded by the costs of growth in booming areas and low property values in poor areas.

Most tax observers agree that North Carolina needs a broader tax base. One of the Realtor® talking points is “Narrow vs. Broad Based Taxes” but the discussion is predicated on a false assumption that a Transfer Tax is being proposed as the sole source of revenue. The Realtor® solutions:

Replacing the transfer tax with an increase in a broad-based property tax
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If a sales or income tax were used, then the tax base would increase further

So Realtor®s would rather see increases in existing property tax, sales tax and income tax before a transfer tax that actually spreads the burden of growth.

Another Realtor® argument is “volatility of revenues”, yet transfer tax revenues would be less volatile than either income taxes or sales taxes. In fact the costs of providing for the growth that obviously benefits Realtor®s could be decreased if counties had a broad based, predictable revenue stream. It would even be possible to lower existing property taxes, sales tax and and marginal income tax rates if the State had a broader tax base.

Realtor®opposition to a 1% transfer tax in a transaction with a Realtor® “tax” of 6% can not be described by any rational measure. Realtors want to hide the real costs of home ownership and bury them in the property taxes in escrow. For every argument against the 1% transfer tax for roads, sewers, and schools, multiply it by 6 and ask your Realtor®: “What’s in your wallet?”