Cut the Property Tax Discount

May 11, 1995

For the satisfaction of owning a home in the Land of Pleasant Living, Marylanders pay an unpleasant price: settlement costs 73 percent above the national average. Not coincidentally, Legg Mason reports that the median cost of a new home in the Baltimore area last March was $41,000 more than the median throughout the United States.

Baltimore County contributes significantly to these onerous rankings. Its 1.6 percent property transfer tax is the highest in the state -- one reason that many middle-class families bypass the county when shopping for houses.

County Executive C.A. Dutch Ruppersberger has made the reduction of local closing costs a priority of his new administration. During the 1995 General Assembly session, he pushed for -- and won -- passage of a law that would empower the County Council to halve the discount received by county homeowners when they pay their property tax bills before Sept. 1.

With the resultant savings, Baltimore County would exempt the first $22,000 of every house sale from the local transfer tax. A county homebuyer would then see a reduction of $352 in his or her closing costs. The amount could be even higher for first-time buyers under a recently signed Maryland law that likewise aims to lower settlement fees.

It remains uncertain, though, whether the council wants to use the power granted by the county's state delegation. Some council members argue that $352 is chump change compared to closing costs of several thousand dollars. Others are caving in to the anti-tax crowd that rails against the discount reduction as another form of levy. Those leaning toward approving the cut say they would do so mainly to spare Mr. Ruppersberger an embarrassing setback five months into his term.

We prefer the positive approach of Councilman Stephen G. Sam Moxley, who backs the Ruppersberger proposal as "a move in the right direction." The idea of keeping $352 at settlement might not be as great an incentive to potential homebuyers as the quality of the public schools and the safety of the streets. Yet it's a step that should be followed with similar forward-looking measures.

The council members so eager to kill this plan apparently lack an alternative to slow the flow of the middle-class from Baltimore County. We urge them to approve the discount reduction. It might be a small, symbolic victory, but it's one that could begin to turn around the county's image as a place where folks would rather not settle.

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