Governor proposes to balance the budget on the backs of REALTORS® and property owners!
Two years ago, Governor Taft's proposed state budget included a number of provisions taxing real estate services. Although those particular items are not included in this year's proposed budget, there are three specific items which unfairly target real estate: - New, statewide transfer tax;
- Creating a new Commercial Activity Tax (CAT); and
- Eliminating the 10 percent rollback on commercial property
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Talking Points
SUPPORT the personal income tax reduction
Rates in all income brackets would be reduced by 4.2 percent a year, totaling 21 percent by 2010. Those earning less than $10,000 a year would immediately pay no tax. The reduction of personal income tax rates should help Ohio become more competitive and contribute to economic development and the creation of more employment opportunities.
SUPPORT elimination of the tangible personal property tax
Tax on equipment and machinery would be cut in two years and on inventory in five years. The Ohio economy is growing slowly relative to the rest of the nation. Elimination of the tangible personal property tax and reduction of personal income tax rates should help Ohio become more competitive and contribute to economic development and the creation of more employment opportunities.
SUPPORT a permanent ½ cent increase in the sales tax rate
The state tax rate would fall from 6 percent to 5.5 percent. The rate is currently scheduled to decrease to 5 percent on June 30.
OPPOSE the statewide transfer tax
The Governor has proposed a new one-mill statewide transfer tax (up $1 for every $1,000 of taxable value) on top of any transfer tax currently being imposed at the local level (which can be as much as 4 mills).
This would be the first time this type of tax is used to generate revenue for the state's general revenue fund. Once in place, this precedent-setting tax would become a tempting target for future increases. Because the tax is paid only by those who happen to be selling real estate, our association has consistently opposed such taxes as being selective and discriminatory in nature. The tax is assessed against just one type of asset?real estate?while similar taxes are rarely applied to financial assets such as stocks and bonds. Transfer taxes are highly regressive and contribute to higher costs, making homes and other types of property less affordable especially for first time home buyers.
OPPOSE the elimination of the commercial rollback
Immediate elimination of the 10 percent property tax increase may be impossible for current businesses to accommodate. Elimination of the rollback is not consistent with the Administration's stated goal of encouraging and promoting economic development. Higher real property taxes will result in increased expenses for commercial property owners and tenants and will contribute to a corresponding decline in commercial property values. These factors contribute to reduced economic development for our state at a time when we desperately need to encourage more business development.
OPPOSE the CAT tax
A new Commercial Activity Tax (CAT) would be levied at a rate of .26 percent on all business entity's (except banks) gross receipts above $1 million a year, phased in over five years. Such a tax is problematic for the real estate industry because it does not provide for deduction of pass-through revenue (i.e. commissions received by the listing broker but then distributed to others such as the selling agent and cooperating broker.)
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