Just in from Greater Boston Real Estate Board
Meeting Tonight! 5:30 p.m., Cambridge City Council Meeting, Sullivan Chamber
The City of Cambridge is considering enacting a local by-law to establish a new sales tax on homes. The Cambridge City Council will hold a public hearing tonight! Monday January 7 at 5:30 pm, Cambridge City Hall, 2nd Floor, Sullivan Chamber, 795 Massachusetts Avenue.
Policy Order #10 on Monday's Cambridge City Council agenda will begin the process towards establishing a real estate transfer tax in Cambridge. The Policy Order will initiate a home rule petition from Cambridge asking the Massachusetts legislature to allow Cambridge to create the tax. The adverse economic impact and inequity inherent in real estate transfer taxes make them a bad tax policy for a number of reasons.
- Subverts Prop 2 1/2: The tax would subvert the voter approval process inherent in a Proposition 2½ override in which voters can decide for themselves whether to increase their own property taxes to fund affordable housing.
- Community Wide Responsibility: Community-wide responsibilities should be paid for by the entire community. The proposed tax scheme is inequitable and discriminatory as it would single out a small segment of the population, specifically home buyers and sellers, to pay for a community wide need/responsibility.
- Unstable Source of Revenue: The real estate market is highly sensitive to economic downturns; this tax would provide an unstable source of revenue for a current and ongoing community need.
- Exclusionary: The tax is exclusionary because it would in effect create an additional barrier to entry. It would establish an entrance and exit fee for each community that adopts it.
- Increased Cost: Additional taxes and fees are a major burden to buyers and sellers particularly at the time of closing. Taxes and fees have a negative impact on housing costs and economic development.
- Equity Stripping: It is important to remember that, unlike a home purchase which can be financed, payment of a sales tax cannot be financed. Such a tax would cost thousands of dollars due at closing from the buyer or taken from the seller’s proceeds. This transfer tax could be viewed as a municipal “equity stripping” of the value of one’s home.