The American Real Estate Association (ARA) is backing the Missouri Association of Realtors (MAR) in its rally against House Joint Resolutions 173 and 174, which would allow state lawmakers to phase out state income taxes and supplement revenue with expanded state and use taxes through two constitutional amendments.
The resolutions’ supporters say eliminating state income taxes will attract more businesses to the state and allow families to keep more of their income. However, detractors — including the MAR — say the proposed amendments will create a knock-on effect, opening the door for the instatement of transfer taxes on the sale of a home, new taxes on services and the potential for a combined sales tax rate of 16 percent.
Elizabeth Mendenhall | Credit: LinkedIn
“We are thrilled to have the American Real Estate Association stand with us in this critical statewide effort,” Elizabeth Mendenhall, a sixth-generation Missouri Realtor and past president of the National Association of Realtors, said in an emailed statement. “I have sold real estate in Missouri my entire career, and I know what Amendment 5 would mean on Main Street.”
Mendenhall said the most concerning parts of the resolutions and the accompanying amendments are that they allow lawmakers to significantly increase sales taxes without voter approval for five years and expand the list of goods or services that can be taxed, such as residential utility costs, childcare and rent.
Lawmakers would also have the option to override the ban on real estate transfer taxes, which passed by a whopping 83.73 percent in 2010.
“It would raise costs every time someone buys or sells a home, add new taxes on the services families use, and hit seniors on fixed incomes the hardest, all without a vote of the people,” she added in the statement.
An April report from The Missouri Independent explained the potential impact of the amendments on the state:
- Income taxes account for 65 percent of the state’s revenue
- Sales taxes account for 22 percent of the state’s revenue
- The top state income tax rate is 4.7 percent for taxable incomes greater than $9,200 per year
- The sales tax is 3 percent for general revenue, but earmarked state taxes and local sales taxes push the total sales tax to between 7 and 8 percent
- The sales tax would need to rise by as much as 8.5 percent to replace revenue lost from eliminating income taxes, without expanding the range of goods and services that can be taxed
ARA co-founder Mauricio Umansky said the amendments, which have been dubbed “The Everything Tax,” are a negative for agents and consumers, and that ARA will do all it can to support MAR as it ramps up its efforts ahead of the Aug. 4 vote.
Mauricio Umansky | The Agency
“Amendment 4 would make it far harder for citizens to fight back,” he said, referencing the potential for lawmakers to increase taxes without voter approval. “That is a bad deal for hard-working agents and for every Missouri family trying to buy or keep a home. When Missouri’s Realtors stood up to stop it and asked for a national partner, ARA answered. We urge a no vote on both.”
Jason Haber
Jason Haber, ARA’s other 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 for ARA is to be the bat signal for the real estate industry,” he said in a phone call with Inman. “When agents need help anywhere in the country, they send up the signal, and we show up, and we stand with them. That’s exactly what happened here in Missouri; they sent up the signal, and ARA answered.”
Haber said there’s a lot on the line for Missouri homeowners, homesellers and homebuyers, especially when it comes to affordability. The ARA co-founder pointed to a Missourians for Fair Taxation website, which estimates that the typical Missourian will see a $535 annual net tax increase if the amendments pass.
“If you look at this through a few lenses, first for homebuyers and homeowners, [this law] could make it harder to purchase a home if [real estate] transfer taxes get implemented alongside taxes on other things, like home inspections, decorating, painting, plumbing, construction and other real estate services. Those things could be taxed in a way that they’re not now,” he said. “And if we dial out from [housing] affordability, everything becomes more expensive for other groups, like seniors and folks on fixed incomes.”
Haber said MAR and ARA have bipartisan support, with some Republican lawmakers joining Democrats in opposing the bill due to the removal of state revenue benchmarks that must be met before an income tax reduction can happen and no legal recourse for voters if the amendment leads to an increased tax burden.
“So we think it’s bad for not just the real estate community in Missouri, but for regular ordinary citizens of the state as well,” he added. “We’re excited to work with people across the political spectrum in the state to help get these two amendments defeated, and we’re especially honored to be working with the Missouri Association of Realtors, who’ve done so much good work in this state.”
