Ballot measure would ban tax on real estate transfers

One of the issues on the statewide ballot Tuesday is Constitutional Amendment No. 3, which prohibits the taxation of real estate sales or transfers of real estate.

The proposal was placed on the ballot after an initiative petition campaign conducted with the support of the Missouri Association of Realtors.

Joan Morris, broker and owner of RE/MAX Select in Fulton, said the Missouri Association of Realtors organized the campaign because Realtors feared that at some point in the future the state or any city or county throughout the state might need new revenue and decide to approve legislation or an ordinance that would impose a tax on real estate transfers.

To prevent this from happening, real estate interests circulated initiative petitions calling for an amendment to the state constitution to prohibit the legislature from passing a law or local ordinance taxing real estate transfers.

“The proposal is a bit confusing because a voter needs to vote yes in order to vote against higher taxes in this case. Our yard signs say ‘You have to vote yes to say no to taxes,’ ” Morris said.

“We want a constitutional amendment so we don’t have to fight the issue of a transfer tax everywhere it could come up year after year in every corner of the state. We don’t want to fight it one time in Springfield, then another time in Shannon County, and another time in some suburb in St. Louis,” Morris said.

“There are 37 states that now have some form of a real estate transfer tax. Even if you inherit a house from your parents, you have to pay the tax because it’s a transfer tax whether you buy it or inherit it. Everybody pays property taxes every year. This would just be an additional tax on homeowners, and we want to avoid that, especially in today’s market when it is hard enough to sell your house,” Morris said.

Morris said the proposal has not come up in the legislature recently but during the last 10 years one or two states add the real estate transfer tax every year.

On May 2, the signed initiative petitions were turned in to Missouri Secy. of State Robin Carnahan. She had until Aug. 3 to verify the submitted signatures. On Aug. 3, Carnahan announced that the measure failed to qualify to be placed on the November general election ballot.

The Missouri Association of Realtors supported a lawsuit filed against Carnahan contesting her determination that circulators did not collect enough qualified signatures to place the amendment on the November general election ballot.

Cole County Circuit Court Judge Paul Wilson ruled Aug. 31 that the measure should go on the ballot. The judge said the constitutional rights of the signers of the petitions were being ignored. He said technical errors causing several signatures to be disallowed were not enough for the court to invalidate the signatures.

After the ruling, Carnahan said her office planned to file an appeal because she felt the judge was challenging the constitutionality of state rules.

To resolve the issue, all sides of the lawsuit banded together and asked the judge to modify his ruling in exchange for dismissing the appeal. Wilson dropped his original ruling and changed it to state only that the measure should appear on the ballot. In his revised ruling, he said nothing said about why he issued the ruling.

The ballot title of the issue is: “Shall the Missouri Constitution be amended to prevent the state, counties, and all other political subdivisions from imposing any new tax, including a sales tax, on the state or transfer of homes or any other real estate?”

Elizabeth Mendenhall, a Columbia Realtor and president of the Missouri Association of Realtors, is a strong supporter of Constitutional Amendment No. 3. Mendenhall said the measure is needed to prevent double taxation and to “keep politicians from penalizing Missourians with such a bad tax policy.”

There is no organized opposition to Constitutional Amendment No. 3.

Some legal scholars and professors have opposed the measure on grounds that it would prohibit the legislature from imposing the tax if it chose to do so. But no statewide organized effort has been mounted against the measure.

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