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19 <br />to a developer, the developer to a builder, and the builder to a homeowner. In each <br />of these steps, a land transfer tax would have been paid. <br />• A transfer tax would affect only those people who sell property in the county, a <br />relatively small number in any given year; though, this is eventually levied on every <br />property when it is sold. <br />• Transfer Tax is levied on all types of property, even that which is owned by non- <br />profits, churches, and affordable housing groups. <br />• It would be levied on all transactions even if the property seller is selling at a loss. <br />• According to economists from UNC and NCSU, a transfer tax is more volatile and <br />therefore less predictable and dependable than a sales tax. <br />• The current real estate market slowdown may lower projected revenues for a <br />transfer tax for the foreseeable future. <br />• A transfer tax is not deductible from Federal income taxes. <br />Pros FOR Sales Tax <br />• Sales Tax spreads the tax burden most broadly of all taxes. <br />• Is paid partially by nonresidents, which lessens the burden on property owners <br />• Because this sales tax exempts food and medicine, it places a less regressive <br />burden on less privileged citizens versus the existing local options sales and use <br />tax. <br />• According to economists from UNC and NCSU, a sales tax is predictable with less <br />variability. <br />• Sales Tax revenue will grow with new retail development. <br />Cons AGAINST Sales Tax <br />• Sales tax is the most regressive tax option. Higher Impact on Lower Income <br />Residents/Owners. <br />• Combined state and local sales tax is already a component of local revenue stream; <br />would not diversify Orange County tax base <br />• Orange County does not have sufficient retail base to make a reliable income <br />stream. This sales tax is going to be predominantly based on the actual point of <br />sale. Orange County has significant retail/sales tax leakage to adjacent counties. <br />• This is a increase in an existing tax and not in and of itself a new tax <br />• Sales taxes are not imposed on services, which are a faster growing part of the <br />overall NC economy <br />• Sales tax revenues are lost on internet sales to retailers with no physical stores in <br />NC (point of nexus) of the state (Roughly $600M in NC)