The Missouri Legislature is considering eliminating the state income tax. But local experts fear it could lead to the enactment of a transfer tax.
The American Association of Realtors (ARA) is supporting the Missouri Association of Realtors (MAR) in rallying against House Joint Resolutions 173 and 174, which would allow the state Legislature to phase out the state income tax and expand state and use taxes to supplement revenue through two constitutional amendments.
Supporters of the resolution argue that eliminating the state income tax will attract more businesses to the state and allow families to keep more of their income. But opponents, including MAR, say the proposed amendments would have a knock-on effect, opening the door to a transfer tax on home sales, new taxes on services and a potential combined sales tax rate of 16%.
brian jared
“We are excited to have the National Association of Realtors partner with us on this important statewide initiative,” Brian Jared, president of the Missouri Association of Realtors, said in an emailed statement. “I’ve sold real estate in Missouri all my career, so I know what the Fifth Amendment means on Main Street.”
Jared said the most concerning parts of the resolution and accompanying amendments are that it would allow lawmakers to significantly increase sales taxes without voter approval for five years, and that it would expand the list of goods and services that would be taxed, including residential utilities, child care and rent.
Lawmakers will also have the option of overriding a ban on real estate transfer taxes that was passed in 2010 by an astounding 83.73% vote.
“Every time someone buys or sells a home, costs will rise, new taxes will be imposed on the services families use, and seniors on fixed incomes will be hit hardest, all without a public vote,” he added in a statement.
An April report in the Missouri Independent explained the amendment’s potential impact on the state:
Income taxes account for 65% of state revenues Sales taxes account for 22% of state revenues The highest state income tax rate on taxable income over $9,200 per year is 4.7% Sales tax on the General Fund is 3%, but designated state and local sales taxes bring the total sales tax to 7% to 8% Scope of goods and services that can be taxed Sales tax would need to increase by up to 8.5% to make up for lost revenue from income tax repeal without increasing it
ARA co-founder Mauricio Umanski said the proposed change, known as the “Everything Tax,” would be bad for agents and consumers, and that ARA would do everything in its power to support MAR as it ramps up its efforts leading up to the August 4 vote.
Mauricio Umansky |Agent
“The Fourth Amendment would make it much harder for people to fight back,” he said, referring to the possibility that lawmakers could raise taxes without voter approval. “This is a bad deal for hard-working real estate agents and for every Missouri family looking to buy or keep a home. When Missouri realtors stepped up to stop it and called for a national partner, ARA answered. We urge both of you to vote no.”
jason harbor
Jason Haber, another ARA co-founder, said the group is providing financial and on-the-ground support through phone banking and helping organize events ahead of the vote, including a Thursday rally in Columbia, Missouri.
“Our goal at ARA is to be a beacon for the real estate industry,” he said on the phone with Inman. “When agents anywhere in the country need help, they send a signal and we show up and support them. That’s exactly what happened here in Missouri. They sent a signal and ARA responded.”
Harbor said there is a lot on the horizon for Missouri homeowners, home sellers and home buyers, especially when it comes to affordability. ARA co-founders point to the Missouri Fair Taxation website, which estimates that if the amendment passes, the typical Missourian would see an increase in net taxes of $535 per year.
“If you look at this through a few lenses, first of all, for homebuyers and homeowners; [this law] If this happens, it may become more difficult to purchase a home. [real estate] The transfer tax will be introduced alongside taxes on other things, such as home inspections, decorating, painting, plumbing, construction and other real estate services. These things could be taxed differently than they are now,” he said. [housing] While affordable, everything becomes expensive for other groups, such as the elderly and people on fixed incomes. ”
Haber said MAR and ARA have bipartisan support, with some Republicans joining Democrats in opposing the bill. That’s because it removes state revenue thresholds that must be met before income tax cuts can be realized, and voters have no legal recourse if the amendment leads to an increase in their tax burden.
“So we believe this is bad not only for Missouri’s real estate community, but for the general public of the state as well,” he added. “We are excited to work together across political lines in our state to defeat these two amendments, and we are especially honored to work with the Missouri Association of Realtors, which has done a lot of good work in this state.”
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