This article came out today and discusses some of the progress regarding changes to the tax issues. This new proposal sounds like progress. To summarize, 25% of the first $200,000 will be taxed and 85% of the next $300,000. So, if someone has a house that is worth $250,000 (roughly our median price), they will be taxed at:
$200,000 x 25% = $50,000
$ 50,000 x 85% = $42,500
$50,000 + $42,500 = $92,500
At a 20 mils rate, that would equate to $1,850 in tax. That is almost certainly lower than the Save Our Homes rate. The same house with a $25,000 homestead exemption today would be $4,500 if you were to buy it new.
There are some advantages and some disadvantages with this scheme. The advantages are:
1. It will make everyone more equal than under the SOH plan which will currently have people paying dramatically different prices based on how long they have been protected.
2. It will not penalize someone who is trying to move into a community or moving from one home to another.
There are also some disadvantages:
1. Higher priced homes will be paying dramatically more than they currently are. One example of a riverfront home owned by people who have been there since 1983 would have the owner's taxes change from taxable value of $435,000 to taxable value of $1,100,000. That means a change at 20 mils from $8,700 to $22,100!
2. It still does not address the investment (rental) property. Owners of those properties will still pay a disproportionate share. That cost will be passed on to our renters.
3. It does not address commercial property. Our businesses are being so heavily taxed now that they are reducing costs.
These disadvantages are severe. These issues must be addressed in order for the plan to succeed. However, the advantages are strong enough that this plan is a benefit to our State. Two proposals which are being discussed would benefit the plan:
1. Allow property owners to maintain Save our Homes benefits at their option. This will protect people who are living in more expensive homes who have had the promise of lower taxes from the State.
2. We should extend some benefits to non-homesteaded properties. While there is a focus on homesteaded properties, we need to consider our economic engine. Vacation homeowners, companies, and renters need protection as well.
Front page news - newsjournalonline.com
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