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Sponsor says graduated transfer tax would raise revenue and shift costs; real‑estate groups oppose
Summary
Delegate Sheila Ruth outlined a graduated real‑estate transfer tax intended to raise state revenue and generate funds for programs while protecting land‑preservation funding; real‑estate and building industry groups warned it would depress sales and hurt housing supply and jobs.
Delegate Sheila Ruth presented House Bill 342, which would convert Maryland’s flat transfer tax into a graduated rate tied to sale price. The sponsor said the change would shift the current flat half‑percent transfer tax into tiers that begin at one‑quarter percent and increase at higher price points; she and her staff provided county median‑price analyses showing the proposed distribution would lower transfer tax for many median transactions in several counties while increasing it for higher‑priced sales in a smaller number of counties.
Ruth said the bill includes safeguards so revenue transfers to the General Fund do not reduce long‑standing land‑preservation program funding below a five‑year average. She argued the measure could produce significant additional revenue while protecting preservation funding.
Opponents were numerous and vocal. The Maryland Multi‑Housing Association, Maryland Realtors, the Maryland Building Industry Association and the Maryland Chamber of Commerce urged an unfavorable report. They argued the commercial and residential markets already show declining sales and prices in many sectors, and that increased transfer taxes would raise transactional costs, reduce sales volume, and risk job losses. The multi‑housing association cited CoStar data showing declines in multifamily sales volume and price per unit.
Witnesses also raised a potential constitutional concern about tax uniformity; the hotel and development sectors argued increased transactional costs are non‑financeable and could further discourage mobility in the housing ladder.
Why it matters: the bill targets a major transaction tax affecting buyers and sellers and could change incentives for home sales and investment. Supporters framed the measure as revenue‑raising while protecting preservation programs; industry groups said it would worsen an already weak market.
Next steps: no committee action was recorded in the hearing; stakeholders asked for additional analysis of market impacts and constitutional uniformity questions.
