Hartford Mayor Eddie A. Perez is taking a different approach by proposing to tie property taxes to a homeowner's income. Those who own and live in one-, two- and three-family properties would pay no more than 4 percent of their income on that property. (Cohen)
The idea seems to be to encourage owner-occupancy while easing property tax burdens on poor families. Here's how it might work:
Take a property in the West End now taxed on the most recent assessment - dating to 1999 - of $114,660. The owner now pays $4,701 in taxes. If Hartford conducts a revaluation this year, city officials estimate it would be assessed at about $269,000 and, under the current tax scheme, the owner would pay $8,350.
Under Perez's plan, the amount of tax depends on who owns it. If the owner lives in the house and makes $90,000 year, the tax is capped at $3,600. If the owner-occupant makes $50,000, the cap is $2,000. But if the property is owned by a landlord who lives elsewhere, the city estimates a tax bill of more than $9,500. (Cohen)
Of course, the increases would be passed on to renters in the form of rent hikes, which doesn't exactly seem fair.
It is a novel plan, and one that's sure to draw attention. Then again, it really doesn't seem like anything more than a stopgap, and an attempt to make the system a little bit more fair. The massive costs of education and social services which cause high property taxes in Hartford and other towns and cities aren't going to go away any time soon.
The plan requires the approval of the General Assembly.
Source
Cohen, Jeffrey. "Perez Tax Plan Bucks Norm." Hartford Courant 16 March, 2006.
13 comments:
I think Perez is also trying to squeeze more money out of taxpayers--which this plan would sort of do but exempting the first $x probably wouldn't.
Lottery winnings, trust funds, and retirement funds are all going to be taxed as income.
What Perez is really talking about is tax relief for the voting residents of Hartford. Homeownership is one of the greatest indicators of voting likelihood. He'll cut them a break for his own popularity, and have it subsidized by the renters who don't vote and will have to pay more in rent. It is an ugly, regressive way of feathering his own political nest.
Homeownership is one of the best ways to revitalize a city. People who live in their homes are more concenerd about their neighborhoods, their schools, and their city. This has nothing to do with rewarding voters, Perez doesn't have to worry about that despite the grumblings in one of the State Rep Districts. Perez is worried about increasing homeownership which I believe he says every chance he gets.
This plan seems to do that
Non-resident landlords, my guess would be, wouldn't care about those factors I listed above so it would seem that this is an attempt at tax equity for resident homeowners at the expense of out of town property owners. Seems fair to me.
GC- you are right, its a stop gap. When the legislature delayed revaluation a few years ago, Perez and others warned that it was worthless unless they were going to tackle property tax reform...and we all know how that is going. A stop gap seems to be the only option.
Kudos to Perez on at least trying to fix the property tax problem locally while the legislature commissions more studies.
"Non-resident landlords, my guess would be, wouldn't care about those factors I listed above so it would seem that this is an attempt at tax equity for resident homeowners at the expense of out of town property owners."
You are right, the tax bill will be sent to those out of town property owners. And they will immediately pass on the increase in cost to their renters. So the only group that really loses out is the renters, those least able to afford the increase.
This is the same type of shell game as Rell's car tax dodge.
The expenses/costs to Hartford remain the same, but the taxes raised to cover those expenses/costs are spread over a different tax base.
Shifting the difference in payments under the cap to an income driven formula will only force higher income people and businesses out of a city like Hartford or shift ownership of property to shield the property owner. It would only seem to worsen Hartford's fiscal limitations.
Speaking of gaps...
With his plan you are talking about a major shift in the mil rate plus it opens up too many possibilities for cheating just as many do now with income tax. I give the man credit but I don't buy into it. The exemption sounds more realistic to me and makes it impossible for anyone to cheat.
Furthermore, I can't see how it is right to tax a resident double for "house x" because he makes double of what the owner of "house y" makes. Again, I applaud him for trying to do something because it is a HUGE issue statewide but I don't see this as the answer.
The problems with property taxes are not going to be solved until the problems with spending escalating at paces beyond the taxpayers' abilities to pay are solved. This involves the Legislature reviewing and removing the myriad of unfunded mandates, etc. it imposes on the cities and towns. Don't hold your breath!!
My first reaction to this is that it will further discourage middle and upper class people from living in Hartford.
This is a very valid concern. How will this impact the huge new crop of luxury condos going in?
they'll demand a huge state subsidy, like everything else built in Hartford...
and you wonder why taxes go up...
Who would want to live in Hartford anyway..its a hellhole....rotten schools....driveby shootings.....60% of its residents on some form of gov't assistance...
lets get real here...perez has no chance to get it passed....folks know that all he wants to do is either pick our pockets or steal our wallets...
Personally Perez ought to call a meeting and turn cank the city charter ..break up hartford into smaller units and cede it back to the state.
Which unfunded mandate? Education? Emergency services? Water Pollution Control? Blaming the out of control costs in CT on unfunded mandates sounds great but it is ludicrous.
Which unfunded mandate? Education? Emergency services? Water Pollution Control? Blaming the out of control costs in CT on unfunded mandates sounds great but it is ludicrous.
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