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:
|
CY 2005
|
|
Number of
|
Average
|
Average
|
Percent
|
||||
|
Assessed Value
|
Homeowners
|
Property Tax
|
Relief
|
Relief
|
|||||
| < $50,000 |
97,433
|
$331
|
$267
|
81%
|
|||||
| $50,000-$100,000 |
201,473
|
$993
|
$312
|
31%
|
|||||
| $100,000 – $150,000 |
313,395
|
$1,650
|
$270
|
16%
|
|||||
| $150,000 – $200,000 |
307,384
|
$2,255
|
$221
|
10%
|
|||||
| $200,000 – $250,000 |
265,383
|
$2,772
|
$168
|
6%
|
|||||
| $250,000 – $300,000 |
153,709
|
$3,383
|
$119
|
4%
|
|||||
| $300,000 – $400,000 |
187,325
|
$4,144
|
$59
|
1%
|
|||||
| $400,000 – $500,000 |
76,746
|
$5,179
|
-$13
|
0%
|
|||||
| > $500,000 |
80,761
|
$9,191
|
-$326
|
-4%
|
|||||
| All Homeowners |
1,683,609
|
$2,741
|
$171
|
6%
|
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.
Tax Sanity? Your proposal is insane.
Once again you will be putting the tax burden on the middle class. And what about the people that don’t own property?
This is another pyramid scheme that robs from the middle class and gives to the poor!!!
I thought your viewpoints on an income tax were legitimate. Why hook on to this insane proposal?
Perhaps I’m missing something or the explanation is unclear, but how can this be revenue neutral yet show a 6% relief for ALL homeowners?
Mark…I think the answer may be that the chart shows residential property (homeowners), whereas the proposal would raise taxes on non-residential property. The money raised from the non-residential property could account for the discrepancy. I also have some questions about this proposal, and will try to do some more research over the course of the day. My intuition tells me that this will result, to an extent unknown, middle-class homeowners in King County subsidizing better off homeowners in, say, Chelan County, where property values aren’t as high. It’s the state portion of the property tax that concerns me, in this regard.
“From each, according to their abilities, To each, according to their needs, and Democrats have LOTS of needs!” [K. Marx, Hillary, Fidel, Teddy “Oldsmobile” Kennedy, Fidel, Jung, and Al Sharpton can’t be all wrong, can they?]
Since renters will ultimately pay any increase on “non-homestead” residential properties the majority of the truly poor will end up paying – as will mobilehome owners (poor and elderly) who typically rent the space. Everyone from struggling to upper middle class who own moderate priced homes (if you call up to a half million a moderately priced home) will get the bulk of the reduction. Those with high valued properties (which likely includes the most wealthy among others) will pay more. Businesses that can will pass along their increased costs to their consumer base (that would be all of us) while those that cannot be competitive doing that (would this most likely be small businesses?) will join the poorest and those with the highest valued properties as the losers. Isn’t there a better way?
I am curious if you’ve studied the incentives this creates with regards to urban sprawl? I’ve heard in some places they use split-rate property taxes where they make a distinction between the value of the house and the value of the land it sits on — does the homestead exemption make this distinction? (Not that I’m entirely sure taxing land higher than housing has the right effect here…) I also would like to know what happens to those who rent, as apartments are the most common form of high density housing and we shouldn’t put those who choose to live in apartments at a disadvantage. The discount needs to be proportional to the number of people who have their primary residence at that location, whether or not they are the owner. (Is it?)
It doesn’t look like this bill would impact renters for the most part, nor businesses AT ALL, as it only applies to homeowner’s “primary residence”. If the primary residence includes rental units, then those renters might face higher rents, but large rental buildings held as investments wouldn’t be affected.
At least that’s how I read it.
Any bill that is co-sponsored by the ultra-liberal Sharon Tomiko-Santos AND the ultra-conservative Toby Nixon is probably a solid piece of legislation.
Mark @ 2 asked “Perhaps I’m missing something or the explanation is unclear, but how can this be revenue neutral yet show a 6% relief for ALL homeowners?”
That would be the same question I have. If in fact the amount is made up via an increase on non-residential property taxes, 1) where can I find a discussion and account of that side of the equation, and 2) does it differentiate commercial residential properties (such as rental communities), from places of business and manufacturing?
The bill seems to only state what properties qualify for the exemption and doesn’t go into detail as to how non-exempt properties are affected. But the FAQ says: “The Homestead Exemption shifts burden from less expensive homes to more expensive homes, as well as to non-residential property.” And the article says: “The result is substantial property tax relief targeted at middle- and low income homeowners, while remaining absolutely revenue neutral.” and “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.”
From what I see.. any property not qualified for the exemption is gonna get hit – that’s necessary if the bill is to be revenue neutral. The little chart shows only the effect on homeowners and conveniently ignores the rest. I haven’t been able to find any estimates of the big picture.
From the chart at TaxSanity.org the overall effect on all homeowners is a reduction of $287,897,139 (1,683,609 homes with average relief of $171.). Apparently, to be revenue neutral the increases on other properties will need to total that amount.
I fail to understand how someone who live in a $500,000+ home utilizes over 3 times more government services than someone who lives in a $200-250,000 home. After all, property taxes are for the most part used for General Fund Services.
Yet the $500,000+ homeowner pays about 3.3 times more Property Taxes???
Me @ 2 & others
The only other thing I can figure is that this is a case of statistics not representing that actual situation. The true number for “All Homeowners” should be calculated as:
Total Tax Paid Pre-Change minus Total Tax Paid Post-Change (which should result in a revenue neutral “zero”) divided by Total Number of Homeowners
But, I’m thinking that others are right in that they mislead by not showing how we’ll pay for that 6% reduction (by taxing non-exempt and commercial property).
“Lies, damned lies & statistics” – Benjamin Disraeli
The result is substantial property tax relief targeted at middle- and low income homeowners, while remaining absolutely revenue neutral.
The bill shifts alot of tax from Washington State residents to those who live in King County.
Thus, for everyone who thinks KC is bad a deserves to be punished, here is your opportunity to pile on.
Erik-
I believe the indexing by county removes that possibility – the homestead exemption value is set individually for each county based on a percentage of that county’s median home value.
I’m preparing a more detailed reply to the many comments and criticisms, but I just want to clarify a couple facts first.
The table represents the impact of a flat $30,000 Homestead Exemption on your entire state and local tax bill. The DOR provided these projections under a previous draft of the proposal, so it is not entirely accurate. I provide it merely to show you the types of shifts such an exemption would make. As the bill stands now, the exemption is indexed to 20% of county median property value for local taxes, and 20% of state median property value for the state portion.
The state portion comprises about a quarter of your bill. And it is true that as currently written, burden would shift to wealthier counties like King for the state portion of your tax. But local burden shifting remains within each local tax district. In retrospect, perhaps the better solution would be to eliminate the exemption on the state portion, and just up the index percentage.
So please be aware that in King County, where property values are so high, the exemption will be higher too, and the break-even point (the point at which you start to pay more taxes due to the higher rate, than you save due the exemption) moves well beyond the $500,000 figure shown in the chart.
But one thing the chart does accurately reflect is that the exemption does NOT shift burden onto the middle class, as Swatter suggests. The vast majority of homeowners will save money or see no significant change.
For those interested in more numbers, there is a fiscal note attached to last year’s HB 3076. OFM estimated that for CY05 the bill would have shifted about $250 million worth of local tax burden… not really all that much in the scheme of things. I hope to see new numbers tomorrow.
Hmmmm. Ok, then why the specific chart?
Also, how about apartment complexes and commercial properties?
Could this raise the tax rates on apartment complexes where the poor folks hang out?
Doesn’t much of the extra tax get plopped on commercial properties.
Better deal with the warts now.
D Huygens @ 16 Perhaps Goldy can help us with this, but…
I think you are right except for the state portion of the property tax levy. This amounts to between about 20-30% of the total levy, varying considerably by county (per Dep’t of Revenue statistics). The homestead exemption for this portion is based on the state median value. I believe this would have, in a way limited by the fact that it is not a large part of the total levy, the effect Erik states. That is, some shifting of taxes away from counties with low median evaluations to counties with high median evaluations. When Goldy says that home values roughly correspond with incomes of the residents, he is correct, but that doesn’t mean that the incomes of owners of valuable properties in King County roughly match the incomes of owners of similarly valued properties in low valuation counties. A $500,000 house in many Seattle neighborhoods equates to a $200,000 house in Wenatchee (I’m guessing, but likely am close). Chances are very likely that the incomes and home values of Wenatchee homeowners do not roughly correspond to those in King County. The fly in the ointment is the extreme (in some cases) variation in property values by county. All that said, though, we should not let the proposal’s flaws obscure its merits.
Goldy @ 17
Sorry, I was typing my 19 while you were posting your 17. For my part, I would feel more supportive if the state portion was treated in a way to eliminate the tax-shifting.
That must be liberal math you are referring to. If you rob Peter then you give it to Paul. So someone is hurt and has to pay more.
Tupically, it is the middle class that is hurt.
I do want to relate that in the past I used to employ 20 high paying jobs. And it looked on paper that I was making a lot of money. Until tax day. So, now, I employ 2. I don’t make as much but I don’t work as much either. It seemed that I busted tail with 12 hour days and 6 days a week in order to what- employ people. There really wasn’t the reward you would expect.
So, take it easy on us middle class. But I guess it all depends on the definition of “middle class”.
I see absolutely no benefit to this tax redistribution “scheme”.
The highest assessed properties are commerial ones. Isn’t this were most of the tax shifting will be placed upon?
An unintended consequence of this bill is to encourage sprawl. If in fact the burden is shifted to wealthier counties like King, the trickle down effect is to make housing less affordable for everyone in King County. There is already an exodus from King County by people in search of affordable housing. This is largely because income rarely keeps up with the cost of housing in King County. If you are a low income citizen, why not sell your house in King and buy cheap property in Chelan?
Go sprawl!
Liking it @ 23 wrote, “If you are a low income citizen, why not sell your house in King and buy cheap property in Chelan?”
If you’re suggesting that’s what’s going to happen as a consequence I highly doubt it. People live here for a great many reasons. If it was no big deal for people to up and move to Chelan then they would and it would be the hub of civilization, not just a place to vacation or conduct gubernatorial court challenges.
swatter @ 21 wrote, “If you rob Peter then you give it to Paul. So someone is hurt and has to pay more.”
If Peter is Bill Gates and Paul is Joe ImBarelyGettingThruEachDay then it I’m not going to start crying for Peter. Better than the approach W has taken in D.C. It isn’t like Joe like being Paul, and the system is rigged in such a way that he’s never likely to become Peter.
Rather than continue to speculate on specifics I’ll wait for Goldy to provide some additional answers to the questions we’re raising.
Before I respond to particular criticisms and questions regarding the impact of a Property Tax Homestead Exemption, I first need to explain some of the constitutional constraints we’re working with, and the specific objectives we’re trying to achieve.
Washington’s tax structure is unusual in many ways. First of all, the constitution does not allow “split rolls”, that is, all real estate is considered a single class of property, and must be treated uniformly. Second, there’s that pesky “uniformity clause”, which makes it very difficult to target relief to particular properties.
While we would have originally preferred to limit the tax shift to high value residential properties and second homes, that simply is not possible. The result is that the exemption does shift burden to commercial property… including residential rentals.
The uniformity clause creates an additional constraint in that the exemption must be uniform across a single taxing district. Since the state property tax is a single district, we can’t index its exemption to median county property values. The state property tax comprises about 25% of your bill, and as written, the bill would shift some burden from poorer counties to wealthier counties like King. That is not the intent of the bill, and I suppose it could be addressed by excluding the state tax, and raising the index rate. So see… the discussion here has already raised an issue that could make the bill better.
The objective of the bill is simply to address the growing property tax burden (as a percentage of household income) for many middle- and low-income homeowners. Rapidly rising property values have had a particularly severe impact on the low and middle segments of the market: the cost of entry-level homes are rising dramatically faster than the incomes of the people buying them.
The result is that property tax burden has been steadily shifting downstream, as low and middle valued properties comprise a larger portion of the total tax base. At the same time, residential property value growth has outstripped commercial property value growth in many regions, resulting in a steady shift of burden from commercial property to residential.
Some have attacked the Homestead Exemption as redistribution of wealth, but in fact, that is what is already happening in the other direction. The Homestead Exemption attempts to correct this shift.
The bill should also be viewed in the context of the most regressive state and local tax structure in the nation, a tax structure that has become more and more regressive over time. Of course, what we really need is major tax restructuring, but that simply is not going to happen overnight. The Homestead Exemption is an opportunity to raise the broader issues of tax fairness, while partially correcting one little part of the problem.
Okay… so no let’s answer some questions.
Q: Does the bill shift burden to the middle class?
A: No. It does exactly the opposite. While the chart provided does not include the actual numbers from the current proposal, the broad patterns will remain consistent… the vast majority of homeowners will see no increase in their tax bill. Since the exemption is indexed to local values, actual numbers will vary from county to county, but will remain relative to each other. For example, in King County, the value at which you see your taxes go up will be significantly higher than the $500,000 shown on the chart.
Q: Is this proposal insane?
A: Um… no. Similar measures exist in 37 other states, including the second most regressive state, Florida. So this is far from some wacky, crazy idea.
Q: How can the proposal be revenue neutral if all taxpayers save 6% on average.
A: Averages are kind of stupid numbers. But this does indeed represent a small shift from residential property to commercial property. Please keep in mind that residential property comprises the largest portion of the tax base.
Q: Will this negatively impact renter?
A: Well, it certainly won’t help them, except in making it easier for renters to afford to buy a starter home. Burden will slightly shift to rental properties, and depending on market conditions, that could be passed on to renters. We would have preferred a Vermont style graduated property tax that includes credits to renters, but that simply is not feasible without an income tax in place. If we really want to help middle- and low-income renters, we would address the overall structural regressivity of our tax system.
Q: “From each according to his ability, to each according to his needs.”
A: I believe the motto was coined by Lenin. But it would be equally consistent with the teachings of Jesus, so don’t throw that “commie” crap back at me.
Q: Why use the chart if it is not specific to the actual bill?
A: Because some like other bloggers, I don’t choose to make up my own numbers, and this was the best I had. This is a complicated analysis that requires data to which I do not have access. It would also require a county by county analysis to present you with numbers that would illustrate the impact on you personally. Now that the bill has been resubmitted, we will be able to make more detailed information requests to the OFM and DOR. That said, it does illustrate the general pattern of redistributed tax burden that we would see statewide, on average.
Q: Does the majority of the shifted burden go to commercial properties.
A: That is not my understanding, but I will be asking for more detailed analysis. The majority of the shift goes to high value residential properties and second homes. Even so, remember that tax burden has been steadily shifting from commercial properties to residential for twenty years.
Please keep the questions and comments coming. If you have better ways to address this issue, I want to hear them.
What does that do for my renter…a single mom with 2 kids going to nursing school and paying me $700.00 per month that escalates with the taxes in multiples?
Goldy–
What is the impact of this on Pacific County???
Look very carefully and then ask one of the County Assessor’s.
Needs to be tweeked a bit you will find out.
In fact…call the Pacific County Assessor.
Chuck–
Great question!!!
I have renter’s too.
What’s next…statewide Rent Control??
Goldy @ 25
Q: How can the proposal be revenue neutral if all taxpayers save 6% on average.
A: Averages are kind of stupid numbers. But this does indeed represent a small shift from residential property to commercial property. Please keep in mind that residential property comprises the largest portion of the tax base.
Goldy, It seems that the supporters of the bill are “not ready for prime time” until this question is answered. Shifting 6% of the residential property tax bill to commercial/rental properties could certainly result in more than a “small increase” in commercial property tax bills. For example, if residential property is 2/3 of the total, cutting residential 6% means the “remainder” has a tax increase of…12%? Don’t forget that the remainder includes apartments, rentals, etc. and rent increases with or more than taxes. How do they expect anybody to support this unless this question is answered?
(before anybody busts my chops, the above is an example illustrating my question and does not imply anything, Don)
As a second comment/concern, will this create a requirement that the state monitor which property is our “homestead”? If a taxpayer owns a rental house or 2, or maybe a cabin, will the DOR have to staff up to process all the declarations required to treat a primary residence differently than a second home?
David Goldstein over at HorsesAss.org has some nice coverage and discussion of HB 1744, the Property Tax Homestead Exemption, which he helped create last year.
G-man, I am going to throw out some stuff and if I read you correctly, you will take it and work out what I perceive as bugs.
A $500k commercial building is middle class and I submit, up to $1million building could be considered middle class. After all, it’s not like I own it outright- it is more like the bank does and I make payments on it.
I have a small business in that small commercial building.
My house is nothing spectacular but people think it is worth more than $500k (don’t tell the assessor, please).
But, mostly in my experience, it is the rich that get richer and the poor that get poorer.
When the commenter compared our tax to Bush’s tax cuts, I couldn’t help but think of how many rich guys had stashed their money instead of using it in order to avoid making more money and paying more taxes. The tax cuts encouraged people to use money.
(But this is a whole other story).
G-man, I have to hand it to you for at least trying; but I would like to get an income tax with NO sales tax as the equalizer.
zip @ 29
It doesn’t negate your point, but for completeness I believe the term commercial property, as you are using it, also would include undeveloped land. Also, some perspective may be in order. The numbers don’t appear to be very large for most individual parcels, and can be adjusted in the final bill by adjusting the percentage of exemption. I don’t have the evidence in hand, but my sense is that Goldy is correct when he says that, because assessments of residential properties has been rising at a more rapid rate than those on commercial ones, taxes have been shifting in the other direction for perhaps the last decade. A note of interest, if anyone is still reading and cares, is that tax rates as a percent of valuation have dropped considerably to what they were in the 1960s and 1970s, per DOR stats.
DanielK @ 24
Even as we chat, the Olympian ran an article today stating in part:
South Sound’s housing market is in unprecedented territory.
In 2004, the average price closed the year above $200,000 for the first time at $209,168, up 11 percent from the previous year.
Before April, the average price had never eclipsed $200,000.
Several factors are driving prices up, Doug DeForest of Olympia Master Buildings has said:
• People are moving to South Sound from the north, where housing prices in King and Pierce counties are much higher.
• There’s a short supply of buildable lots in Pierce County, largely because of the Growth Management Act. As a result, Pierce County buyers and builders are turning their sights on Thurston County.
Daniel – Supply and demand is not rocket science. People many not want to move to Chelan County but there is an exodus from King and Pierce.
The exodus is a reality partly because of the artificially controlled scarce supply of buildable lots under the Growth Management Act, and other costly regulations.
If you build it they will come. Sprawl happens.
Liking it @ 33
I don’t have the time now, but your comment contains lots of points for discussion. For example, the GMA affects all counties, and the CAOs don’t vary greatly from one to another, as best as I can tell. The low supply of building lots in Pierce and King may also be in part the result of these counties already having large populations. The exodus from King and Pierce, if it is happening in significant numbers, hasn’t seemed to discourage an influx of others into these counties. Comments by a spokesman for the Olympia Master Builders, while they may be correct, also should be expected to have a particular agenda behind them. And perhaps most interesting is the question: is the exodus from King and Pierce, if it is occuring, a good or a bad thing? Anyway, your comments are thought-provoking. Thanks.
The GMA discussion was a bit of a side-track. It is only relevant to illustrate that there are many factors decreasing housing affordability. To the extent that HB 1744 shifts the burden to wealthier counties (as Goldy indicates @ 17), it too will slowly decrease affordable housing statewide in a trickle-down effect. Cumulatively, the multiple factors that decrease affordability contribute to an exodus.
There is another excellent article in today’s PI about affordability. http://seattlepi.nwsource.com/.....ity16.html
“In the fourth quarter, the affordability index was 97.8 in King County, 85.6 in Island County, 66.9 in San Juan County and 98.1 in Whatcom County.”
A score below 100 means that middle income families don’t make enough to buy a median cost home. So we are talking about people on a fixed income (seniors), and minorities that don’t earn the same salary as white males for the same job. We are pricing the democrat’s base constituents out of King, Island, San Juan, and Whatcom.
The exodus consists of lower and middle income families, and those moving into King consist of the yuppie professionals. Those forced out of the market in King, will get paid less for the same job in Thurston. The poor get poorer and the rich get richer.
The illusion of HB 1744 is that low and middle income families will get a deduction, when in fact they are being priced out of the market. Families purchasing homes below the median cost will get a deduction under HB 1744, but when King County’s median price is $331,000 don’t call them low and middle income families.
This is the reality of every regulation (like the GMA and proposed HB 1744) that cumulatively decreases affordability. The exodus is real and it consists of low and middle income families.
What is the price of a normal house, let’s say a couple of blocks off Green Lake these days?
I also pay personal property taxes for my business on items like my computer, software, desks, and copier. Are these included? And since this is more of a county thing, would that be a difference? My personal property is substantially lower than 500k.
These are old numbers, but in NLIHC Out of Reach report, you will note that 40% (in King County alone) of households are renting rather than buying. Of these, 46% are unable to afford even fair market value of a 2 bedroom household. In other words, the lowest income households are renting rather than buying. By shifting taxes from lowest income home owners onto commercial properties (which means onto renters), isn’t this more regressive than what we have in place? I mean this seems to me to be shifting the burden off the middle class and slightly onto the rich but mostly onto the very poorest of the poor.
Liking It @ 35 and swatter @ 36
swatter…the proposal doesn’t apply to personal property taxes.
Liking It..thanks for the PI link; I missed that article this a.m., apparently. Also, per a later post by Goldy, I think they may be changing the part of the proposal that deals with the state portion of the levy. This would eliminate the tax shift from low valuation counties to high valuation counties. I will support the measure if that change is made. It’s a modest proposal, but I think a step in the right direction. I think your next to last paragraph is incorrect in that the tax break isn’t directly tied to having a house below the median. A house well above the median will have a lower tax bill if the proposal passes. That doesn’t, however, negate your excellent point that it is not likely low and middle-income folks buying homes at these prices (although many middle-income people live in them now by virtue of long tenure). As with all tax proposals, it is difficult to know, even after a thorough look, what the ultimate results will be if it is enacted.
Bill @37
There is no doubt that there would be some shift to rental properties, but it is not like they will be absorbing the entire shift, or even the greatest portion of it. We will be asking DOR for a county by county breakdown, which is the only way we can accurately predict how this might impact renters.
Perhaps what is necessary is to combine this proposal with Low-Income Renter Tax Credit.
Low-Income Renter Tax Credit is an interesting idea. But doesn’t that throw a wrench in the whole “revenue nuetral” idea? Now you need a fiscal impact statement for the tax credit. Is being revenue nuetral really a priority or just lip service?
Here’s another thought:
You increase revenue by shifting the tax burden onto commercial properties, but immediately lose revenue by giving credits to low-income renters. It sounds like a crude attempt at rent control, but may in fact subsidize high rents. Ultimately, taxpayer $$ (in the form of your proposed renter tax credit) end up in the pockets of landlords.
If we’re gonna re-distribute wealth.. why mess with property taxes to do it? Wouldn’t it just be easier to make an “I’m Rich” list and an “I’m Poor” list… you could use any criteria you wanted to. Then match them up and all the rich folks could be forced to write checks directly to the poor folks.
Sounds stupid??? Well, it’s exactly the same effect you are looking for – you just aren’t hiding the transaction in taxes and you have much better control of getting people into the proper group.