A Review of Real-Estate Transfer Tax Legislation Enacted by 13 States and 3 Local Areas to Fund Parks and Conservation

Authors

  • Jamie Rae Walker
  • John L. Crompton

Keywords:

real estate transfer tax, legislation, Texas, parks and conservation

Abstract

A real-estate transfer tax (RETT) is a tax imposed on transfers of real property within a taxing authority’s jurisdiction. Since it was repealed at the federal level in the 1960s, 37 states have authorized a RETT and 13 of these have used at least part of it to create a dedicated funding source for park or conservation purposes. This paper analyzes the legislation in those states and in 3 local jurisdictions where a RETT has been enacted.The tax rate levied by these jurisdictions varied from 0.10 to 2.00% and it was paid either by the buyer or by the seller, or it was divided between them. The conceptual rationales for the tax and for who should pay it are discussed. Interviews with administrators of the 16 RETT programs yielded insights into developing coalitions in support of the legislation; stability and leverage; and suggested improvements to specific RETT enabling legislation.The revenue potential that would emerge if a RETT were implemented in Texas for parks and conservation is explored. Typically, realtors are the primary opponents of RETTs, and they identify four major objections to them: (a) they are regressive and discriminatory; (b) their narrow base violates the principle of horizontal equity; (c) they are volatile and do not provide a stable source of revenue; and (d) they reduce the ability of potential buyers to purchase a home. The legitimacy of each of these objections is analyzed and all of them are found to be unconvincing.

Published

2005-07-18

Issue

Section

Programs That Work