Senior Citizen Exemptions from Proposition 2 1/2 Overrides

As has been widely reported in the media, the Massachusetts House of Representatives has approved legislation that would exempt property taxpayers who are 65 and older from paying increases in property taxes that are attributable to operating overrides or debt/capital exclusions of levy limits under the Massachusetts local property tax cap known as Proposition 2 1/2.

The purpose of the legislation is to increase the likelihood that overrides and debt exclusions will pass in local elections. The reasoning is that seniors receive relatively few benefits from local government, but shoulder a substantial portion of the local property tax burden. If their tax bills were lower, seniors would be more likely to vote in favor of overrides and debt exclusions that would benefit the community as a whole, according to this reasoning.

The property tax relief would be made in the form of an abatement to an eligible property owner - a reduction that would cease if a property is transferred to an owner younger than 65 or if an owner ceases to meet income eligiblity requirements.

This legislation seems well-intentioned, but potentially ineffective or problematic. It is not clear to this observer how large a population would be affected by the legislation. 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. This observer wonders whether members of the House voted this based on anecdotal evidence rather than a more considered study of the numbers of affected taxpayers and the likely financial impact of the legislation.

Even if one grants that a significant number - however defined - of elderly taxpayers will receive benefits - to the point that local political decisions will be meaningfully affected, there are additional concerns about the legislation.

It could be fairly complex to administer - especially with the passage of time. Operating overrides are built into the property tax base. This means that an abatement of an override would happen every year following that override as long as the taxpayer is eligible. Not only would the original override be abated, but any subsequent increase in taxes that is built on the override would need to be abated as well. On top of this is the fact that individual valuations and tax bills fluctuate with time. If the value of a property owned by an elderly taxpayer declines relative to that of other properties some years after an override, possibly lowering a tax bill below what it was at the time of the override, should that elderly owner still receive an abatement?

Beyond the administrative complexities are the unintended or unforeseen consequences of the legislation. One possible consequence is that overrides might become more difficult to obtain with time as those property owners younger than 65 bear the entire burden of such tax increases.

The Massachusetts Senate now will consider the legislation. This observer hopes that the Senate looks at quantifiable public policy impacts rather than anecdotal evidence in considering this bill.

Comments

[Kathleen Conley Norbut]

The proposal is another disingenuous band-aid for the Legislature and the Administration to avoid an honest and comprehensive discussion on taxation in the Commonwealth.

Exempting the seniors as a class based on income and not considering wealth is bogus. There are seniors in the income category suggested by the legislation that have the means to support essential services, whereas there are working families, single parents and non-parents who do not have financial means in property or other investments.

I have suggested putting excise taxes on the table to allow localities to increase revenues that stay local. Stop the gravitational pull to the state house where the returns to communities are not sufficient by anyone's standards.

[David Eisenthal]

Kathleen,

I also think that the proposal is disingenuous, but for a different reason. I think that few taxpayers will receive benefits under the legislation - so few, in fact, that very few communities will see a meaningful change in their political dynamic on overrides and debt exclusions.

In communities like Monson and West Brookfield, where average tax bills are less than $3,000, I doubt there are many seniors - or any one else - for whom the property tax bill is at least ten percent of gross income. Thus, the legislation would not affect significantly the likelihood of passing an override in these communities.

The legislation could have more of an impact in high tax communities that have significant elderly populations. Newton (average bill over $7,000) and Longmeadow (average bill over $6,000) come to mind. The problem with this legislation in those communities is that, with taxes already high, shifting the burden of increasing taxes onto non-elderly taxpayers is not necessarily going to make passage of overrides more likely.

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