Prop 2 1/2 Exemptions for Seniors
I just googled “Prop 2 1/2 Override Exemptions Seniors” and got The Eisenthal Report at the top of my list — this links to a February column. There’s some really interesting back-and-forth about the political use of the exemption and its potential cost.
Essentially, the Report warns of the cost of cutting the tax, while saying it is “disingenuous” in that it will benefit very few people, reduce revenues, and shift the burden of taxation onto working voters, making overrides even less popular than they are. He also says that they would benefit wealthier seniors more than poorer, saying “In addition to being older than 65, an eligible property owner would need to have annual gross income of less than $60,000 and the annual property tax bill would need to be greater than 10 percent of gross income.”
So, if I have a house worth $1.3 million in Newton, and I make $59,000 per year in investment income, and I pay more than $5000 per year in property tax, I benefit. But if I live in Beverly in a house that assesses at $330,000, and I am taking a pension and IRA distributions (etc.) of $40,000, if I pay less than $4,000 in property taxes, no relief.
The thing is, I think their should be an exemption system. What any property tax exemption for the elderly needs to be is a net that keeps seniors from losing their homes to the state, and that shouldn’t be so hard to work out. I’m thinking of people in Gloucester whose houses assessed for $45,000 a few decades ago, now living on $25,000 per year, and found themselves living in a house “worth” over $200,000. If property tax assessment really forces people to move out of a community, then clearly there’s a problem. It shouldn’t be allowed to lower people’s quality of life below a certain standard.
It doesn’t help that a lot of today’s elderly are carrying way more more debt than their predecessors.
The exemption, as it stands, looks like a brilliant political tool — if seniors aren’t affected by an increase (or if they believe they aren’t, or if there is a limit mandated by the override bill), they’ll be more likely to okay the increase. Will it work? It assuages fear in the group that is most likely to actually vote, and assuming that those votes are all informed enough to take into consideration the finer points is to gravely overestimate the American electorate. So, maybe.
Is it a disaster? I don’t think so. If we see another surge forward in real estate assessments in the next 20 years, a lot more seniors might be protected from becoming needy, meaning, in this case, too poor to afford to stay in their homes.
Is it troubling that it also means that working households are going to shoulder so much of the burden for wealthy, privileged households? We ought to be used to that by now.
What I think community leaders should do to get the operating budgets they need is link the override bills to real, palpable improvements in Senior Services. I can’t speak for other places in MA, but many of my older neighbors rely on Access vans and other municipal and county services that aren’t available to my grandparents in their little Pennsylvania town.
Another thing that might help a lot of municipalities out is to offer property tax incentives to elderly citizens for energy efficiency repairs to their homes. I have one neighbor who has my favorite house on the street, a lovingly tended natural cedar shingled cape, with an ancient furnace and what look to be the original single-glazed windows. If municipal governments give seniors some serious help in terms of permanent energy savings, they might be less hostile towards school spending. And we get a greenhouse gas reduction benefit, and an energy conservation benefit, and a reduced fossil fuel use benefit out of every house that is brought up to modern efficiency standards.
John K said:
To be honest, I didn’t even read most of your post, but I’m guessing it says that the elderly should get a property tax exemption or reduction?
Why should the old get any preferential treatment? Because they are old? What, they didn’t know that was going to happen? Didn’t have time to prepare?
If old people deserve a reduction, so do I, since I don’t have kids. Most of my property tax payments go toward the public schools.
Old people have a choice – pay the tax or move. Most of them live in huge houses that they may have paid off, years before. They have little annual expenses, beyond property taxes, home insurance, and perhaps maintenance projects. If they can’t afford these, then they should seriously consider selling.
Wait, do I sound too harsh?
May 20, 2008 3:18 PM
mike.martin said:
The Prop 2 1/2 Override really brings out the f#$*-them-and-let-them-starve in my readers; come on, John! No, not harsh at all! Why not just put the elderly on icebergs and set them adrift in arctic waters?
People should be able to stay in their homes as long as possible in their old age. I guess it isn’t unusual that people have no compassion for the elderly, until they become elderly themselves. Old age is coming for us all.
All an override exemption does is freeze the rate of taxation for people who have lived in a community — and paid taxes — for a long time. It doesn’t exempt them from property taxes! Just from increases.
What sucks is that it ends up being really good to folks who don’t need the break all that much, and only so-so to people on the edge.
May 20, 2008 3:34 PM
mike.martin said:
Oh, it’s always good to read before you open you…ah…keyboard. I’m not advocating the exemption, I’m advocating something different than the bill that passed.
I don’t have kids either, but I’m happy to support our schools.
May 20, 2008 3:36 PM
John K said:
Property tax exemptions for the elderly is suddenly a litmus test for whether or not one has compassion for old people?
Okay.
May 20, 2008 7:57 PM
mike.martin said:
No, a system for making sure old people on relatively low fixed incomes aren’t kicked out of their homes because of taxes is.
May 20, 2008 8:07 PM
John K said:
I’m not trying to get into an argument, so I’ll just add one more thing.
It’s not practical to do what you suggest. We all pay property taxes assessed at the value of the home, not based on income or anything else. It seems like a terrible idea to me to mess with it.
I read your post. You didn’t stop there, I think you are also suggesting that the state / municipality give the elderly money so that they can make home improvements?!?
I’m against messing with the property tax structure at all, this coming from someone who probably takes the least amount back in city services vs. what I put in. Schools? Yeah. Buses to drive the elderly to the market? Yeah. Count me in on both.
I know I’m going to be old someday. I realize, too, that I may not be able to pay my property taxes.
If the difference between having a home and not having a home is a $4,000 property tax bill, I think the elderly person has bigger issues to deal with.
In the immortal words of John Silber, “When you’re ripe, it’s time to go.”
May 21, 2008 12:00 AM
Shorty said:
Not that Silber followed his own advice. And forgive me if I am deeply suspicious of anyone who quotes that evil little man.
That aside, the elderly do often get tax breaks and other benefits that would also benefit the younger crowd. I’d really like to see heath care extended to the younger generation. Still, society does have a responsibility to take care of its members who can not work, and this strikes me as a pretty reasonable way to go about it.
May 21, 2008 8:25 AM
mike.martin said:
John,
We tend to rob Peter to pay Paul in our fiscal dealings, which is one thing fiscal conservatives are right to complain about. I’ll clarify the home improvement thing: if we are already spending money on our ailing power grid, and really looking for increased energy independence, then giving a 1-time break to older people for energy-saving improvements to aged houses is a solid investment.
The over 60 vote is the vote that kills Prop 2 1/2 overrides; old people vote, and younger people don’t. We’re lucky to see 60% voter turnout in this country, and because they make up a huge part of that voting electorate, seniors make a lot of our decisions. I think we need the override, at least in Beverly.
This bill has ALREADY passed, and Eisenthal critiques it for favoring wealthy seniors — and so do I, and so do you, apparently. So we’re not SO far opposed in our views.
I’m saying that if the govt. has to make concessions, they should be concessions that benefit the elderly citizens who NEED help — not just folding money for the already wealthy.
May 21, 2008 8:52 AM
mike.martin said:
Shorty,
I went to U. Pitt during the reign of Wesley Posvar, whose retirement compensation gutted the University coffers to the tune of tens of millions of dollars and left the institution struggling through the next decade (The next chancellor didn’t help; he spend over 6 figures to renovate his office before he even started the job).
Guess what Forbes Quad is now called! Wesley Posvar Hall!
May 21, 2008 8:55 AM
Ellie at Redfin said:
A couple of other blogs commented on this. Somerville Voices has some good info:
http://www.somervillevoices.org/2008/04/02/housing/a-guide-to-tax-breaks/
and the alliance of Boston neighborhoods has a good analysis of why Boston’s property taxes are so high:
http://www.abnboston.org/files/27805e66a50c5568c2e28d2035cfa188-36.html
May 23, 2008 12:26 PM
mike.martin said:
Thanks, Ellie. I noticed one complaint that assessments of commercial properties are too low; I see the same problem in North Beverly and Beverly Farms, with multi-million dollar residential listings. They assess for about 50% of market value, while my more humble abode assesses for close to 100%.
May 24, 2008 10:46 AM