Well, apparently we must be making some progress in our efforts to pass a Property Tax Homestead Exemption, because this year there was actually some organized opposition against it. Various real estate and rental industry associations put in some effort to turn up before the House Finance Committee and testify against the bill. And of course, so did the Association of Washington Businesses (AWB).
The AWB is ideologically pure. They emphatically and consistently oppose raising taxes. On businesses. But they could care less about individual taxpayers, for the fact that property tax burden has been steadily shifting onto the backs of low-income homeowners is apparently okay by them. Suggest for a moment shifting some of the burden back to where it was just a few years ago, and apparently every business in the state will close up shop and move to Nevada. Blah, blah, blah.
The rhetoric of the other opponents was a bit more persuasive, if disingenuous. The fact is, a Property Tax Homestead Exemption would shift some taxes to rental properties. Opponents argued that we’re going to force low-income renters out on the streets. That’s a load of crap, but you can be sure I’ll be asking the Rental Housing Association to testify on behalf of the Low-Income Renter Tax Credit bill I plan to whip up. Then we’ll see how selfless their testimony really was.
I’m not necessarily confident that we have much of a chance of getting this bill through committee this year, but it gives us the opportunity to request more information from the Department of Revenue, and continue to make the argument for progressive property tax relief. The legislative process can be excruciatingly slow, and while it might be tempting to take Eyman-like shortcuts, I’m not stupid or arrogant enough to believe that I can sit down and write a piece of tax legislation all by myself without room for collaboration and improvement.
Besides, I kind of enjoy tilting at windmills. And there certainly is an awful lot of wind in Olympia.
[Want to help? Email the Finance Committee and ask them to send HB 1744 to the floor.]
Goldy,
Like it or not, the measure does look to assist the middle “middle” class and encourage an ownership society for some people.
Yes, those with high end houses would pay more as well as perhaps apartment renters to some degree.
If you believe homeoweners with assessments of $100,000 – $350,000 should be relieved of some tax, this bill is for you.
Thank you for testifying and being so actively involved in politics. In the upcoming few years, the bloggers will have more and more say in things.
I am kind of new to the picture, so could you go back to your assumptions about how residential property tax burden is getting greater than the commercial? I would think that residential values are escalating fasting than commercial and it is harder to make money doing a commercial development.
And I still think that the way to go is a flat rate income tax and eliminate the sales tax that goes to the state.
Swatter @2
Quite simply, residential property values are rising faster than commercial property values. Thus, as residential property becomes a greater portion of the tax base, property tax burden naturally shifts from commercial to residential. Between 1989 and 1999 this shift amounted to 10 percent of the entire property tax base. I do not have current numbers, but have been assured that the same trends continue.
At the same time, there has been a shift of burden from high-value residential property to low and middle value residential property. This is because low and middle value home prices are rising faster, both in real dollars, and as a multiple of personal income, than those on the high end. This impacts affordability, particularly for first time home buyers.
A Property Tax Homestead Exemption is not as precise a tool as we would like, but its objective is simply to address some of the burden shift that has already occurred. Some argue that it is unfair or unwise to shift burden to business, but the fact is, burden has been quietly shifting to homeowners for over 20 years.
That is what I thought you were getting at. However, property taxes are fully deductible on your 1040 and while the first timers and young people are in lower tax brackets and already pay a lower percentage on the income tax, there is some (benefit?) to more tax. Better stated would be a tax exemption would result in a lesser overall tax advantage than what you were professing.
And again, I am of the school where “keep it simple” is my motto. There seems to be a zillion permutations on what can be done.
And again, there is no guarantee commercial values won’t start increasing again. I mean, how high can a single family home go up? And I did ask someone what a house a couple of blocks off Green Lake costs these days.
And in your analysis, can you break down the higher property values between 500k and 1million to see what that burden would be. That would be as a total and not individually. That would debunk my theory that the majority of the tax increase would be on the middle class. Of course, what is the middle class these days?
Swatter, to truly debunk your theory we will need the county by county analysis from the DOR. That will take some time. But it will be debunked.
As to deductibility of mortgage interest, over 82 percent of those homeowners with incomes over $200,000 itemize their federal returns, but that figure is much smaller for lower income homeowners (I’ll have to dig up the number) so in general, shift deductible tax burden to higher income households increases the aggregate state wide total of “tax export.” (Ain’t that a curious turn of phrase?)
Whatever.