July 25, 2005

NC Building Breaks

Would you give money to someone to do something that they're already making money doing and then pay for it by charging someone else? Doesn't make sense right? Well that's exactly what home builders are asking of the North Carolina General Assembly.

North Carolina home builders are asking the government to subsidize their cost of doing business with property tax breaks:

The legislation would create a special class of property for anyone who develops and sells real estate. It would allow builders to increase the value of their property by creating lots, paving roads and building houses without paying any property taxes on the improvements. New homes would not be taxed at their full value until they were sold.

Asking for this tax break, home builders are trying to convince law makers that the price of housing is being driven up primarily by the cost of building, not the high level of demand on the market. And that reducing the cost of building will spur on the housing market. But as it turns out, the home building market is doing just fine:

Builders are already busy in the Triangle. Wake, Durham, Orange and Johnston counties added more than 67,000 homes and apartments between 2000 and 2004, according to U.S. Census Bureau estimates. Johnston Commissioner W. Ray Woodall said his county can't keep up with demand for sewage treatment and other services, and he said builders don't need any more incentives.
Looking at the issue through a policy lens, this legislation would definitely cut into local tax revenues and without a cut in spending, NC lawmakers will have to raise taxes in other places. If you make home builders the winners, then who are going to be the losers?

In short, North Carolina home builders are asking for a publicly-funded handout, plain and simple.


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