Ronald Mortensen, Ph.D.

Co-Founder, CitizensForTaxFairness.org

12-21-19

The Utah Association of Realtors (Realtors) provided key support for Utah’s so-called tax reform legislation that was passed during a special session of the legislature just days before Christmas. This column provides background on Realtor activities and concludes with a series of questions for real estate professionals.

Background

The Realtors have been heavily involved in the efforts to reform Utah’s tax system. Unfortunately, many of the so-called reforms that they support negatively impact the vast majority of Utahns. They support the state sales tax on food, the state sales tax on gasoline and the taxation of additional services.

In addition, Realtors expressed support for new and much higher property taxes even though this would severely impact current homeowners and further increase the price of housing.

For example, in March, 2019, a lobbyist for the Utah Association of Realtors told listeners of Utah’s Red Meat Radio that an entirely new state property tax was the solution to Utah’s tax modernization efforts (March 11, 2019 podcast at 15:30 in the discussion). According to the Realtor’s lobbyist, a new state property tax that automatically brings in more revenue as home values increase would raise between $300 million and $700 million in new, stable, broad-based, discretionary revenue (that’s right, “discretionary” revenue) for the state.

As tax reform efforts progressed, the property tax discussion was deferred to the 2020 general session of the legislature. By that time Republican state Senator Ann Millner is expected to have a bill ready that would automatically increase school district property taxes by the rate of inflation every year without a truth-in-taxation hearing.

It’s important to recognize that either a new state property tax or automatic school district property tax increases would quickly wipe out any tax savings Utahns may have realized in the past as property taxes shoot up. Will the Realtors support this property tax change? If so, can anyone say Proposition 13 and Homie?

In any case, as the tax reform discussions wrapped up, the Realtors threw their full support behind the bill that was eventually passed during the special session of the legislature on December 12, 2019.

The Realtors reportedly spent over $100,000 to develop a website titled Support Utah Tax Reform and on a mailer sent out to 90,000 voters across the state. The website and mailer supported re-instating the state sales tax on food, imposing a new state sales tax on gasoline (roughly 10 cents a gallon to begin with) and imposing sales taxes on a wide range of services such as pet boarding, ride sharing services, shipping and handling charges, dating services, identity theft protection, parking lots, the installation of tangible personal property when part of a taxable sale, etc., etc.).

According to the draft minutes of the December 9 meeting of the Tax Restructuring and Equalization Task Force, “Christy Vail, Utah Association of Realtors, expressed gratitude and spoke in favor of the draft legislation” that taxed food, gasoline and additional services. That draft legislation was basically what was passed by the legislature during the special session and signed by the Governor.

Questions for Real Estate Agents

This raises the question of where individual real estate agents stand on tax reform. So, it wouldn’t hurt to ask your friends in the real estate business if they agree with their Associations’ actions. Also, ask them if they will support the citizens’ referendum to give voters the opportunity to vote for or against the tax reform bill that was passed during the special session.

Here are some questions you may wish to ask:

1. Did you know that the Utah Association of Realtors reportedly spent over $100,000 to mail out 90,000 postcards and to create a website in order to generate support for the sales tax on food, the sales tax on gasoline and the sales tax on additional services such as pet boarding, Uber/Lyft, shipping and handling charges, dating services, identity theft protection, parking lots, the installation of tangible personal property when part of a taxable sale, etc.?

2. Are you aware that legislative leadership and the governor are considering imposing sales taxes on still more services? Do you support imposing sales taxes on realtor services?

3. Do you support a new state property tax as proposed by the Realtors’ lobbyist and do you support automatically increasing school district property taxes each year by the rate of inflation without a truth-in-taxation hearing?

4. Do you support putting the implementation of the new sales taxes and the reduction of the state income tax rate on hold until the citizens can vote on these changes in November, 2020? If yes, will you join those supporting the referendum and help collect signatures by going to this Facebook page and signing up: Utah 2019 Tax Referendum.

5. Will you call the Board members of the Utah Association of Realtors and the board members of your local association to express any concerns you have with the positions they have taken on tax reform?