Funding pensions with transfer tax won't work

During a recent mayoral candidate forum, Philip Walter presented an idea of replacing the property tax funding of municipal pensions with a property transfer tax on sellers.

If I correctly understood the idea he was presenting, I firmly believe the idea isn't feasible. It would take a broad community-based tax and replace it with a targeted tax on property sellers. Call it a "don't let the door hit you on the way out" tax.

It may be easy to think, and say, we will tax people who are leaving town, but we would also be catching in the net all those sellers who are merely relocating in town. This would include seniors who are freeing up their equity nest eggs for retirement, young growing families moving to larger homes, and sadly, people going through foreclosure would be kicked when they are down.

In addition, the income stream from the tax would be a bad match for the target expense item. In difficult economic times, such as they currently are, we have fewer home sales and lower revenue.

With a Property Transfer Tax, this would cause a large budget deficit for pension funding. The reason is that pension boards are typically seeking (often mandating) additional funds during an economic downturn because of lower than projected returns on their investment portfolios. As one can see, funding pensions with property taxes, as most governmental bodies do, is a more stable source of pension funding in good times and in bad.

With all that being said, I don't think we can afford to have an inexperienced mayor right now. Therefore, for experience and many other reasons, I will be supporting Arlene Mulder for mayor. Please join me on April 7th and get out and vote for Arlene Mulder!

Jim Bertucci

Arlington Heights