Here is a novel idea which should raise the ire of developers and realtors while offering some relief and hope to current property owners.
How about charging the 5% sales tax on real estate transactions–at least NEW RESIDENTIAL units? Before you start screaming too loudly, take a look at the potential benefits.
–The 5% tax would be deductible from income tax–great if you live in the house, but of no benefit for out of state investors.
–It would have a chilling effect on the real estates market–maybe. But when rolled into the overall cost it would be hardly noticeable in the mortgage payments.
–Only people who buy or sell a house would have to pay. They can negotiate who pays, but the tax would be on the transaction (sale).
–Rather than complicated impact fees for schools, highways, fire, city, county, etc. the revenues from sales tax collection on real estate would serve to soften the impact on those of us who already own homes when new schools, more cops, and better roads are needed. Existing property owners would not have to subsidize development.
–The revenues could be distributed at the same rate the various taxing units levy currently.
Bottom line is growth would stand a better chance of paying its own way instead of the faulty argument that more people and “economic vitality” make up the difference for those fat cats who get rich at the expense of the existing property owners.
The residential property owners have been taking it in the shorts at an increasing rate–especially when the Idaho Legislature creates tax breaks for big business and developers. The net effect has been more people, students, cars, crime, pollution and bragging rights to being “Business Friendly.”
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