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.