I spent Wednesday morning in Hartford for Realtor Day At the Capitol, where we were given details on issues that we should consider supporting, and issues that we need to come out enforce against. I plan on covering a couple of the issues that we need to strongly oppose, and one that should be supported. I will start with the one that probably ticked me off the most House Bill HB 6349, and cover the other two in their own posts.
It was no surprise to learn that Connecticut like a lot of other States is hurting for money right now. It was also no surprise that our State Legislators are trying to come up with creative of ways of coming up with the money to meet their budget, instead of making tough decisions to cut back on spending. As a result the minds of of our State Legislators have been working over time on how to dig deeper into our pockets to make up their budget shortfall.
This year they might even be out doing themselves in their creativity. It seems that taxing our income at both the Federal and State level is not enough, so they have figured out a third way to tax our income directly through a so called tax on "Professional Services". In the Real Estate Industry this would include Realtors Commissions, Appraisals, Insurance, and Home Inspections, and it would work sort of like the State Sales Tax.
Connecticut currently has a 6% sales tax on almost all goods purchased. Sales taxes as most of us know are paid at the point of sale, and are a result of us making a conscious voluntary decision to purchase an item that we desire, if we choose not to purchase we do not pay. Now some genius at the State Capitol may make the argument that this new proposed tax is also a result of us making a voluntary conscious decision, but there would be one major problem with that. This decision would be made out of a need to work, so that we can buy food, and pay our financial obligations. This decision would result in a 6% tax on top of the income taxes that we are already paying. Also this tax unlike the sales tax which is paid by the person receiving the product, would be paid by the person providing the services.
If this tax is enacted, upon the sale of a house Realtors will be taxed a 6% sales tax on their commission on top of the Federal and State Income Taxes that they are already paying. The same would hold true for the Appraiser, Home Inspector, and so on down the line. I don't know about you, but this is triple taxation to me, and highly questionable.
Now this tax is not just restricted to the Real Estate Industry, but to all who will fall under the definition (which is not really known yet) of "Professional Services". Anyone who feels that all those Realtors out there that make a boat load of money anyway should be taxed as much as possible, need to stop and think for a minute, what if the State decides to include what you do in their definition of "Professional Services"? Remember they have not fully define what "Professional Services" is.
This is a BAD tax for a whole host of reasons, and everyone in Connecticut needs to get on the phone with their State Legislators, and tell them what a bad idea this is. House Bill HB 6349 needs to be voted down, but it will not be voted down unless we make those at the State Capitol know that we know what they are doing, and don't like it.