Kaine is proposing a statewide 25-cent increase in the grantors tax, which is now 10 cents per $100 of assessed value, that owners pay on the sale of a house.
First, the grantor’s tax is paid based on the sales price of the house, not the assessed value.
Nuts and bolts – currently the median price in the Charlottesville area is about $275,000. Thus, the grantor’s tax paid by the seller on that particular transaction would be about $275 – and that’s a lot of money! If the tax is increased to 25 cents $687.50. Note also that this tax is paid only when a property sells (which is happening less and less frequently).
Make no mistake – Virginia’s (and the localities’) transportation systems need help; they need maintenance and they need new infrastructure – roads, bike paths, rail lines – but taxing only one segment of the population that uses the system is wrong. It is difficult to get hard, accurate data on what percentage of people in this area own their homes, but let’s assume it’s anywhere from sixty to seventy percent. Thirty to forty percent of people in the area won’t pay this tax, yet they will still use our roads, buses, etc. This is not a question of fair, but one of whether this is a reasonable proposal.
One reason that the grantor’s tax is proposed is because it is a bit of a hidden tax – it’s just another one of those fees that gets thrown together on the HUD-1 at closing. In the hot market, no one questioned the tax; now every nickel counts.
Why not a broad-based tax that everyone would pay (gas tax), other than lack of political and intestinal will and fortitude?
To target one segment of the population for a tax that needs to be focused on the entire population, regardless of the state of the housing market, is not right.
The best prediction from the Washington Post article goes to lobbyist Charlie Davis –
“At the end of the day, maybe putting a ‘lockbox’ on transportation funds, maybe a local taxing authority, but that is it. Give Kaine credit for pushing for something. The Republicans can be tagged as obstructionists but . . . Kaine came back with almost the identical plan that was shot down last year, so which is more foolhardy? But the session will provide ample opportunity for a lot of social interaction to discuss the presidential campaign and enjoy some wonderful cuisine at the Capitol snack bar.”
And he’s probably right.
Related posts –
Too funny not to post – Copy of the Republican Transportation Plan
Update 06/24/2008: C-Ville has a good article about the state of the transportation debate, including this:
In the event that Kaine’s latest bill goes through unscathed (which is about as likely as UVA winning this year’s NCAA football championship), we the people of Virginia would have the pleasure of paying: 1 percent more when we buy a car; $10 more for annually registering our cars; and, when we sell our homes, a 250 percent higher â€œgrantor’s tax,â€ which would go from 10 to 35 cents per $100 of assessed value. Most of the $1 billion generated annually would go to highway maintenance, but the revenue from the grantor’s tax increaseâ€”about $150 million annuallyâ€”would go toward mass transit.