Fine Print - January 2008

When know means no
By G.D. Gearino

I recently visited a house for sale that was open on a Sunday afternoon for any prospective buyer to inspect. As I wandered through the main bedroom, I noticed a small, decorative pillow propped against the headboard of what was clearly the marital bed. Embroidered upon it were these words: “Not Tonight.”

I’ll confess that I picked up the pillow and checked the other side. Sure enough, it read: “Tonight.”

For a moment, I considered flipping the pillow, laughing evilly at the image of the man of the house returning later that day, spotting the apparent invitation, then slapping on the after-shave and donning his special silk boxers with the phrase “Sex Machine” stamped all over, only to find his missus curled up in bed with a mudpack on her face and the latest issue of Soap Opera Digest in hand. My companion derailed that bit of mischief with a certain look and an unmistakable order: “Don’t you dare,” she said.

Just a few weeks later, voters in 16 North Carolina counties sent a signal that government officials interpreted as “Not Tonight” but the real-estate industry interpreted as “Tonight.” And both of them misunderstood the message.

Voters in those counties, where a real-estate transfer tax was on the ballot, overwhelmingly came out against the levy. The industry, which had advertised heavily to kill the proposals, slapped on the after-shave and claimed the affection of voters. “The good guys went 16-0 last night,” Tim Kent, chief executive of the North Carolina Association of Realtors, crowed at a post-election news conference in Raleigh.

There’s a problem with that budding romance. The tax — which would have required homeowners to give the government some of the proceeds from the sales of their homes — was to be used to offset the cost of accommodating growth. You know, more schools and sewers and sidewalks and such, the things that become necessary when people move to your town. That influx of newcomers is gasoline in the real-estate industry’s engine. More people, more home sales.

That’s how the industry, for its part, missed the signal. It saw the results as a gesture of unhappiness with taxes, while voters may well have meant it as a gesture of unhappiness with unfettered growth. Just because the homecoming queen turns down your romantic rival when he asks her for a date doesn’t necessarily mean she’s enchanted with you. The supporters of the tax made a mirror-image mistake. They focused on growth without understanding that taxpayers were focused on the tax.

Politicians tend to treat growth as inevitable, with the only thing left to decide being how it’s funded. The life of a politician, in fact, is essentially given over to an endless exploration of the different ways that people can be taxed to support both the expansion of the infrastructure and the additional government services that growth demands. There are property taxes, sales taxes and income taxes, but those never quite seem to be enough. So our politicians cooked up a lottery, which at least has the virtue of being a voluntary levy, and a real-estate transfer tax, which they figured would be OK since we’d pay it only when we sold our homes and presumably wouldn’t feel the pinch.

Not OK. On behalf of all voters who slapped away the transfer tax like a creepy, persistent Lothario at ladies night, let me explain why that idea stuck in our collective craw.

Not only is growth not inevitable, the actions of our state and local governments — which have passed out incentives worth hundreds of millions of dollars to huge corporations to move here or stay here — suggest that they actually believe that the only real inevitability is stasis. And remember that those incentive packages typically included significant breaks on the property taxes those businesses are supposed to pay. In the meantime, homeowners get pushed by politicians at both the local and state levels to pony up more in property taxes to pay for the costs of growth that come with those newly recruited businesses.

Politicians thought we voted against growth, but I believe that a lot of us actually voted against tax breaks for the companies that fuel it. At the same time, the real-estate industry assumed a thumbs-down on the tax was a vote for the “good guys.” Clearly, all parties misunderstood the message:

Not tonight.

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