A small group gathered on the steps of the old Flathead County courthouse building in Kalispell earlier this week to kick off an effort to put a measure on the ballot in November that would prohibit a tax on real estate sales and transfers.
John Sinrud, government affairs director for the Northwest Montana Association of Realtors, was joined by Denise Smith of the Flathead Business and Industry Association and several local Realtors to announce the formation of the Coalition to Prevent Double Taxation. The group’s Web site, www.preventthedoubletax.com, boasts support from Realtor associations around the state, the Montana Stockgrowers Association, Montana Taxpayers Association and others.
Its goal is to gather enough signatures to place Constitutional Initiative-105 on the ballot in November. If passed by voters, the measure would amend the state Constitution to prohibit the Legislature or any municipality from passing a real estate transfer tax (RETT). Such a tax can be applied to sales, inheritances or like-kind exchanges of property, and is usually imposed at the time of closing, along with other taxes or fees.
Montana is one of 13 states that currently do not have an RETT and South Dakota is the only border state with such a tax. But backers of CI-105 say the Legislature has considered nine proposals – by Republicans and Democrats – over the last 10 years to impose a transfer tax in one form or another. Each time, Realtors and other interest groups have managed to defeat the legislation, but if passed, this measure could put such proposals to rest once and for all.
“It’s double-taxation,” Sinrud said, noting that Montanans already pay property taxes. He went on to describe the RETT as something that discourages individuals from using their real estate equity to buy bigger homes or pay for expenses like college education.
“You’re taxing the American dream – home ownership!” John Zimmermann, a Realtor, said.
Sinrud added that RETTs typically begin small and then increase.
“They start at 1 percent,” Sinrud said. “Then over the years, they ratchet that up.”
“It’s a real easy tax,” he added. “People don’t understand it.”
To qualify a constitutional amendment for the ballot, supporters must obtain nearly 49,000 signatures of registered voters, including 10 percent of voters in 40 of 100 House districts, by June 18. Sinrud believes CI-105 will receive far more than the minimum number of signatures.
“Our goal is to get 60,000 and we’re well on our way and ahead of schedule,” he said. “The people of Montana are ready to put this on the ballot.”
Sinrud and Smith also say an RETT, were it imposed in the near future, could have a crippling effect on Montana’s still fragile economy.
“Anything that hinders commerce or hinders the economy effectively hinders jobs and job creation,” Smith said. “That’s why the business community is coming together so strongly.”