"Let there be a purpose in all your legislation to recognize the right of man to be well born, well nurtured, well educated, well employed and well paid." - President Calvin Coolidge.
The Missouri General Assembly should consider the words of wisdon uttered by President Calvin Coolidge. Senate HJR 36, entitled "the Fair Tax", is a piece of legislation that will irreparably harm real estate and other professionals in the State of Missouri. Although it is billed as a "Fair Tax Proposal", it is anything but a fair tax.
Senate HJR 36 imposes a flat tax of 5.11% on the sale or rental of personal property and the provision of services (including legal and real estate services). That is, it is a tax on real estate sales commissions.
However, it does get worse. Amendments to Senate HJR 36 submitted on the Senate floor (without prior notice to the general public) opened the door to a transfer tax proposal. The amendment proposed to extend the flat tax of 5.11% to the sale of new construction homes. It is ironic that the Missouri General Assembly has proposed an increase in taxes on developers and builders at a time when Missouri developers and builders are struggling financially, filing for bankruptcy protection and ceasing operations. Ultimately, the amendement and underlying flat tax bill were defeated on the last day of the legislative session on procedural grounds. Missouri remains as one of only thirteen states which do not impose a transfer tax on the sale of real estate. However, the concern is that it is a slippery slope - today the transfer tax is imposed on new construction sales... tomorrow the transfer tax is imposed on existing sales.
With the assessment of a transfer tax on new construction sales, the tax policy in the State of Missouri will become more regressive. Developers and builders will cease operations, home sales will drop, union construction jobs will be lost, and reveneue from economic activity taxes will decline. In addition, the flat tax on sales commission will likely lead to an increase in the rate for sales commissions as the costs are passed on to the consumer - both sellers and purchasers - thereby impacting first-time homebuyers, the elderly and other property owners.
If you haven't contributed to RPAC, now is the time to do so. RPAC is actively lobbying on behalf of front line real estate agents on issues that directly impact the real estate industry. If you are interested in joining the fight against the flat tax and now the transfer tax, contact Ryan Shaughnessy at PREA Signature Realty at 314-971-4381 or send an e-mail to Ryan@PREASignatureRealty.com to obtain periodic legislative updates regarding the transfer tax and other issues.
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