Last year, not satisfied with simply opposing Tim Eyman’s stupid-ass initiatives, I decided it was time to make some constructive proposals of my own. And so I sat down with Steve Zemke of Taxpayers for Washington’s Future to explore creative alternatives for providing real tax relief to those families who needed it most, without exacerbating our state and local governments’ growing fiscal crisis.
After much research and deliberation, we settled upon a relatively simple proposal, a Property Tax Homestead Exemption, similar to that offered in 37 other states. Rep. Sharon Tomiko Santos (D-37) was quick to embrace the proposal; a bill was soon drafted, and introduced as HB 3076.
Although last year’s bill died in committee during a short session, Rep. Santos has reintroduced the bill this year as HB 1744, with bipartisan support. The bill is scheduled for a hearing before the House Finance Committee, Wednesday Feb 16, at 1:30 PM… and I’m hoping many of you will join me in voicing your support.
HB 1744 exempts from all local property taxes a portion of your primary residence equal to 20% of your county’s median property value. Additionally, it exempts from the state property tax a portion equal to 20% of the state’s median property value.
The result is substantial property tax relief targeted at middle- and low income homeowners, while remaining absolutely revenue neutral.
How substantial? Well, last year the Department of Revenue estimated the following average savings based on a flat $30,000 exemption:
$100,000 – $150,000
$150,000 – $200,000
$200,000 – $250,000
$250,000 – $300,000
$300,000 – $400,000
$400,000 – $500,000
As you can see, the vast majority of homeowners would pay lower taxes, with only a 4% increase on homes over $500,000. Note that since the actual bill adjusts the exemption to county median values, the break-even point shifts to a higher property value in higher valued counties. And since 82% of wealthy homeowners itemize their federal tax returns, their net tax increase is substantially reduced by their federal tax offset.
While home value and household income do not necessarily correlate, they tend to on average. And thus a Homestead Exemption would target tax relief to those homeowners who need it most.
To achieve this desperately needed property tax relief, HB 1744 modestly shifts tax burden from low value property to high value property, and from homes to non-residential property. This shift only partially corrects a trend that has been moving in the other direction over the past 20 years, and still leaves Washington with the most regressive tax structure in the nation (although it brings us much closer to number two, Florida… which happens to have a Property Tax Homestead Exemption of its own.)
A more detailed FAQ is available on TaxSanity.org, and from the Permanent Defense Homestead Exemption Center. You can also read the full text of the bill and the House bill analysis, from the Legislature’s website.
Steve and I, along with Andrew Villeneuve of Permanent Defense will be down in Olympia tomorrow, testifying at the hearing (1:30 PM, House Hearing Rm C, John L. O’Brien Building.) We hope some of you can make it.
And we urge all of you who support further debate on this bill to contact the members of the House Finance Committee and ask them to send the bill to the floor. Click here to send an email to the Committee members.
If you have any questions, please leave them in the comment thread, and I will answer them as best I can.