Tag Archives: homestead exemption

A Better Alternative to Help Struggling Property Owners than Initiative 1033

Posted on September 9th, 2009 | Comments Off on A Better Alternative to Help Struggling Property Owners than Initiative 1033

Tim Eyman’s I-1033 purports to help property owners pay property taxes. A big question of course is who should we help. Should we help everyone pay their property taxes – like people who own a second home and/or corporations like Boeing that owns property?

Or should we help those that need help most – like senior citizens on fixed incomes or struggling working families trying to make end meet that have a principal residence they live in.

Eyman’s I-1033 says we should help everyone including businesses and corporate property owners and shopping malls like Kemper Freeman’s Bellevue Square and real estate developer’s and homeowners with second homes and vacation homes. I-1033 says that should be the top priority of any tax dollars that come into the state and city and county as new revenue above this year’s recession baseline set by Eyman becomes available as the recession ends.

This one and only use of these tax dollars now becomes a function of government – to support a transfer of tax dollars collected from everyone and used to then benefit property owners only.

Renters and senior citizens and working families that own no property will continue to pay taxes under Initiative 1033 and will get no property tax rebate or see any new services. This will further increase unfairness in our tax code and institute a reverse Robin Hood program of taxing lower income people and giving it to higher income people in the form of reduced property taxes.

Eyman is trying to institute a scare campaign for property owners about how their taxes are out of control.

Yet this isn’t the case. The Tax Foundation says that in terms of property taxes paid per capita in this state we rank 25th (with one being the highest)out of the 50 states. We also rank 8th in terms of income per capita. Overall our total state and local tax burden ranks us 35th (with 1 being the highest) out of 50 states.

If it’s seniors we want to help, the best solution is to raise the senior property tax exemption and help those most in need. You can click here to read more about the Senior Property Tax Exemption which also covers disabled people.

Or if you’re concerned about people being taxed out of their homes then you should be supporting a Homestead Exemption like some 38 other states have.

Eyman says this can’t be done because you have to tax commercial and residential property equally. This isn’t strictly true because the senior exception is a form of a Homestead Exemption that legal and exists because the Legislative can make exemptions to the uniformity issue.

But even considering the uniformity issue it’s easy to treat both commercial and residential real estate the same by just providing the same exemption for business and homeowners. HB 3162 did just that in the 2007-2008 Legislative session. It had 24 sponsors. HB 3162 was labeled “Providing a property tax exemption for the first $50,000 of assessed value of commercial and residential real property.”

Such a simple answer, helping both home owner’s not being taxed out of their principal residence and also helping small businesses with their principal business location. Equal and fair. Reasonable.

I-1033 IS INSTEAD A WEALTH TRANSFER SCHEME TRANSFERRING SALES TAXES AND OTHER REVENUE TO HELP LARGE PROPERTY OWNERS PAY LESS TAXES. The state says it will total almost $9 billion over 5 years.

Strange how helping large corporations pay their property taxes is more important than helping kids go to college or paying teachers a decent wage or keeping our libraries and parks open for the public or hiring more police or helping seniors stay in their homes because this is the choice in a nutshell.

I-1033 rather than just trying to reduce property taxes directly for those that need help, instead provides a special tax break that mainly benefits large property owners. It would transfer huge amounts of tax dollars that would have been collected from everyone to support public services like health care and Medicaid and parks and transit and sidewalks to do this. It’s a crazy scheme that is ridiculous in it’s implementation and absurdly complex.

I-1033 is a complex measure and will result in a huge change in our present tax structure. It will further erode fairness and deprive our state of needed investments in our community. It provides a special property tax exemption that benefits the wealthy at the expense of those less fortunate.

Vote No on Initiative 1033. Keep Tim’s selfish and greedy hands out of our pockets. Tell Tim NO DEAL. JUST VOTE NO ON INITIATIVE 1033 THIS NOVEMBER 3, 2009!

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Posted in Economy, Elections, Initiatives, Right Wing, Washington State Legislature

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Initiative 1033 – Eyman’s Latest Wealth Transfer Scheme for the Rich

Posted on July 2nd, 2009 | 1 comment

Old dog Eyman just ain’t learning any new tricks. Initiative 1033, which he filed today with the Washington State Secretary of State is just another old trick to transfer money from the poor to those better off, namely property owners.

Eyman latest scheme puts a limit on state, county and city revenue growth by limiting year to year growth to the previous year plus local population growth and a national inflation index. Because it’s indexed to the previous years growth, every time you have a bad year or two, revenues the government will be able to spend will decrease from its previous high

When you have bad times economically that’s usually when more people need help from government. But Eyman does not propose decreasing the sales tax, which is regressive. Last year 57% of state tax revenues came from the sales tax.

Eyman proposes that instead money over his national inflation and population increase will go to help reduce taxes on those that own property. For homeowners the US Census Bureau last year said that some 65% of Washington State households were owner occupied. That means that 35% of households in the state will see excess money collected from sales taxes, for example, go as a tax break to those able to afford homes.

This is very much a reverse Robin Hood economic model Tim Eyman style. Tax the poor and transfer the money to help the wealthy pay lower property taxes. We’ve already been classified as the most regressive state in the country on taxation. This will only make things worse.

If you truly want to help the people who need help on property taxes the most, low and middle income people trying to make a go of things, help them on the property taxes. Things like a Homestead Exemption on one’s principal residence or circuit breaker legislation would be the right way to go.

Initiative 1033 is not an answer to property taxes problems. If it qualifies for the ballot, voters would be wise to reject Eyman’ latest wealth transfer scheme for the rich.

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Eyman I-747 Express Train Roars Through Olympia

Posted on December 1st, 2007 | 1 comment

With train bells clanking and next year election year jitters agitating them like caffeine addicted fiends, Washington State legislators at the prodding of Governor Gregoire, jumped aboard the Eyman Express. With Train Engineer Christine Gregoire driving and with Conductors Frank Chopp and Lisa Brown punching tickets and screaming this train is leaving, Washington State Legislators stampeded, trampling over each other trying to get seats on the train before it left.

Eyman could be seen laughing his head off at them. He mocked them and insulted them even as they bought his over hyped tickets for the train ride and pledged to carry out his revenue cutting agenda framed as the people’s will.

Watching the Washington State Legislature in Special Session yesterday as it dealt with Governor Gregoire’s request to re-enact Eyman’s 1% Property Tax Limit was quite a spectacle.
Unfortunately it was a sad one. They treated the Eyman contrived 1% property tax limit as if it had some relation to a reasonable and justifiable policy proposal when in reality it only related to Eyman’s continued drive to limit government and taxes.

Credit needs to go to those legislators that in the end voted no on re-enacting I-747. In the House they were Representatives Dickinson, Hunt, Nelson, Pederson, Pettigrew, Santos, Simpson and Sommers. In the Senate they were Senators Fairley, Jacobsen, Kline, Kohl-Welles, McDermott, Murray, Pridemore, Spanel and Weinstein. In addition Senator Oemig made strong efforts to amend the legislation as did Senator Kohl -Welles.

Eyman’s I-747 sugar candy solution to people hurting from rising property taxes is nothing more than that – sugar candy. The people who are most in need of property tax help are lower and middle income people who pay a higher proportion of their income in property taxes than do high income people. I -747 does not change that equation since it’s an across the board limit to a 1% increase per year in overall property tax collections. The law benefits rich property owners more than less wealthy ones.

There was no ‘taxpayer revolt’ in Olympia yesterday. Conspicuously absent were homeowners demanding that I-747 be re-enacted. Maybe they know that it really gives very little tax relief , not having seen any significant impact for the 5 years it was law before the Washington State Supreme Court overturned it.

What there was yesterday in Olympia was a railroad brought on by elected officials unwilling and unable it seems to take the time to enact real property tax reform that would help low and middle income taxpayers. What occurred was that the Legislature again turned a blind eye to the fact that I-747 does not provide relief to those that need it most – low and middle income homeowners dealing with property tax bills rising faster that their income and who pay a greater percentage of their income in property taxes than do the wealthy.

The legislature has held hearings the last two years on real property tax relief in the form of a Homestead Exemption that some 40 states have. The Washington State Budget and Policy Center has done detailed analysis on another form of property tax relief known as circuit breaker legislation. But Gregoire didn’t even put these on the table.

Instead Gregoire comes out with an unvetted bill which is nothing more that a reverse mortgage. She called her property tax relief – a deferral of up to one half of property taxes per year for people earning less than $57,000 a year that have lived in their home for 5 years and have equity buildup.

Watching the Legislators deal with the Governor’s tax deferral bill was truly like watching sausage being made. The bill was surprise legislation not introduced in the Legislature before, that had only a day to be analyzed and considered. Committee Chairs were not allowing amendments to be made to it in the hope it would be rushed through. Many objections were raised in the two committee hearings, particularly by county auditors who saw many problems.

It was obvious from the discussion and critique at the hearings in the House and Senate that the bill had lot of problems. One Legislator characterized it as no more than a reverse mortgage that as a mortgage broker he said he would never offer. Eyman called it predatory lending. In this I agree with him. The current senior deferral has a fixed 5% interest rate.

The interest rate on the Governor’s deferral bill is 2% over the current Fed short term lending rate which is now 5%. This make the interest 7% this year. Since it is in essence an adjustable interest rate, what happens when inflation surges? The homeowner unfortunately goes more and more into debt.

Probably very few people will take advantage of her tax deferral. But she will still claim that she did something.

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Governor Gregoire Not Listening to Public on Initiative 747

Posted on November 28th, 2007 | Comments Off on Governor Gregoire Not Listening to Public on Initiative 747

When you send a message to the Governor you would hope that someone actually reads it. I’m sure the Governor doesn’t read all of her e-mail but someone should at least be keeping track of what the public is saying.

So you figure – I sent a message to the Governor questioning the rush to pass I-747. We need property tax relief that addresses the unfairness of laws like I-747 with its across the board cuts that benefit wealthy property owners more than middle and low income property owners. Re-enacting I-747 doesn’t address the real property tax problem.

So the Governor responds back with the following e-mail.

Thank you for contacting me regarding the Supreme Court’s decision to overturn Initiative 747. I know that voters are disappointed by this, and I am committed to acting quickly to resolve the situation.

I-747 was approved in 2001 by a large margin, and the will of the voters should be respected. I have called the legislature into a special session on November 29 to address this issue, and will be asking that the one percent property tax limitation be reinstated.

Again, thank you for sharing your concerns. During this year’s election I heard loud and clear that voters are concerned about their tax burden. It is our responsibility to move quickly, recognizing these concerns and reinstating the will of the voters.

Sincerely,

Christine O. Gregoire
Governor

Whoever reads the Governor’s e-mail and whose job it is to respond should at least write up 2 different responses – one for those supporting her position and one for those opposing it. I was not disappointed by the Supreme Court overturning I-747. Many voters are not disappointed because it is an unfair tax that doesn’t provide the type of help low and middle income property owners could use.

I am disappointed in Governor Gregoire – that she is caving into Tim Eyman and Dino Rossi and seems to have no clue about real property tax reform. She should be looking at ways to relieve the tax burden on low and middle income taxpayers and proposing legislation for a homestead exemption or circuit breaker legislation.

People forget that there is no magic in a 1% limit that doesn’t allow government revenue to even keep pace with inflation. People forget that Eyman first wrote an initiative with a 2% limit that voters passed but which the courts threw out.

As the Tacoma News Tribune wrote in an editorial recently, ” I-747 wasn’t thoughtful; it was a spiteful attack on all local governments because a handful of them had challenged I-722’s 2 percent limit in court.” To now just re-enact I-747 without considering the long term consequences that are building up because it prevents revenue from even keeping up with inflation, would be irresponsible on the part of the Legislature.

The Washington State Legislature should show leadership on this issue and only approve I-747 as a holding pattern on property taxes by adding a sunset provision. Then they should do a study of the impacts of I-747 on needed revenue for local and state government. They should hold hearings and pass legislation for a homestead exemption or pass circuit breaker legislation.

But just reinstating I-747 without evaluating its impacts on local and state governments and without exploring alternatives that are more helpful and fairer to low and middle income taxpayers would show a Governor and a Legislature out of touch with the real world.

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Put Sunset Clause on any I-747 Legislation.

Posted on November 26th, 2007 | Comments Off on Put Sunset Clause on any I-747 Legislation.

The Washington State Legislature is going to hold a special session this Thursday to consider re-enacting Initiative 747. I-747 was overturned by the Washington State Supreme Court. Governor Gregoire has called for the Special Session to put I-747’s 1% overall property tax increase limit back as law.

The Legislature needs time to consider property tax reform that helps those that need help most – low and middle income homeowners. Legislators should only consider enacting I-747 as a holding pattern until they can present and consider other measures like a circuit breaker or homestead exemption. By placing a sunset clause on I-747, like Jan 2009, Legislators can consider alternatives and hold meaningful hearings and allow time for adequate public input and evaluation of real property tax reform – something a one day special session doesn’t allow.

The best one or two proposals, if the legislators want public acceptance and involvement and debate, could be placed on the November 2008 ballot and go into law if passed. If the public rejects them I-747 would stay in place.

I-747 is not progressive tax legislation and does nothing to change the regressiveness of existing property tax laws that put a burden on low and middle income homeowners, forcing them to pay a higher proportion of their income in property taxes than those in higher income brackets.

I-747 is a quick fix that helps rich property taxpayers like mall owners and housing development owners. Gregoire called the special session out of a concern that some property taxing districts might hike their property taxes by more than the 1% limit before the regular legislative session starts in January. Reverting to the old law in place gives taxing districts the ability to increase property taxes collections up to 6% or inflation whichever is lower. Inflation last year, tracking the consumer price index, was about 3.7%.

This does not means that your property taxes under the old law would have gone up 3.7% last year if I-747 hadn’t been law. It means overall property tax collections to keep pace with inflation could have risen 3.7%, which includes combined taxes on existing houses as well as new construction.

There actually is a 1% limit on your property taxes independent of I-747. You can not be taxed more than 1% per year of the value of your home. Why your taxes would go up is because the value of your home has gone up. What is confusing is that I-747 does not limit ant tax increase on your home to 1% per year – it limited overall property tax collections to no more than 1% per year.

Property taxes need to be balanced with the need to pay for public services. Even with no income tax, Washington state’s property taxes are about the median according to the Washington State Department of Revenue.

Enacting an income tax like over 40 other states have would be a fairer system, allowing a reduction in real estate taxes or sales taxes, while paying for public services. It’s something for taxpayers to consider. You have to pay property taxes whether your income has gone up or not. The same is true for sales tax. Both are regressive taxes. But with the income tax, you only pay tax if you have income. If your income goes down you pay less tax.

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Governor Gregoire Panders to Ghosts of Christmas Past

Posted on November 20th, 2007 | Comments Off on Governor Gregoire Panders to Ghosts of Christmas Past

It’s Christmas time and Governor Gregoire has become like Ebenezer Scrooge. She’s busy visiting and revisiting the ghosts of Christmas past. In a trance like daze she calls for a Special Session of the Washington State Legislature to re-enact a flawed policy wish of her right wing opponents – Initiative 747.

Never mind that the Legislature is scheduled to meet in January and the issue of property tax reform deserves more than a one day session to fairly resolve.

The ghosts of Tiny Tim and Dino the DINO flit about in her harried brain. “I must be re-elected. I must be re-elected. Remove these demons!” she screams. “Give them whatever they want, just leave me alone.”

Quite the contrary, Christine, feeding these waifs of thin air only give them more substance and embolden them in their mischievous pranks to throw rotten eggs at state and local governments.

These ghosts are not here to help the citizens of this state that are looking for leadership to change the way we raise revenue in Washington state and end our de facto tax motto of “most regressive tax system in the nation.”

These ghosts are not here to tell the public “when compared to the other 49 states, state and local property taxes in Washington appear to be about in the middle. For fiscal year 2004, Washington state ranked 28th in property taxes at $31.68 per $1000 of personal income, below the national average of $34.75. Calculated on a per capita basis, Washington ranked 18th at $3452 per person.”

The above statement comes from “2007 Legislative Guide to Washington State Property Taxes ” and was prepared by the Senate Ways and Means Committee and the Legislative Evaluation and Accountability Program.

These ghosts will not tell the public that those most in need of property tax help are lower and middle class homeowners whose tax bill is going up due to assessed values on homes increasing faster than their income is going up.

What the ghosts will not tell you is that “In 1995, commercial value of property represented 41.5 percent of the statewide assessed value, and therefore paid 41.5% of the property tax. Since then, the relative share of commercial assessed value (and therefore taxes) has decreased by 8.7% points to 32.8%.” (from 2007 Legislative Guide.)

Re-enacting I-747 will do nothing to address this fact – that homeowners are picking up more and more of the property tax burden.

And I-747 will do nothing to address the fact the the Washington State Legislature also continues to give new tax breaks to businesses .This further reduces the available revenue base and shifts more and more tax tax burden onto individuals and families.

As the Economic Opportunity Institute noted in it’s report “Adding Up: New Tax Breaks in Washington 2004 -2006″ “In the three Legislative sessions from 2004 through 2006, the Washington Legislature passed at least 61 measures either granting new tax preferences or extending old ones. These new tax breaks will cost the state nearly half a billion dollars in the 2007 – 2009 biennium.”

Washington state needs to do tax reform, not keep failed tax policies in place. When compared with alternatives like Circuit Breaker Legislation as proposed by the Washington Budget & Policy Center or a Homestead Exemption as proposed by Tax Sanity.org, Initiative 747 pales.

The Legislature needs to look at property tax alternatives that will help those most feeling the increased pressure of residential property taxes – low and middle income individuals and families . Relief should be considered first on one’s principal residence which homestead exemptions do or by circuit breaker legislation which specifically helps lower income families and homeowners.

But Governor Gregoire and the Democratic controlled Legislature need to leave behind the ghosts of Christmas past and look to what the future can bring. This is why it was encouraging to read the comments of Senate Majority Leader Lisa Brown and House Finance Committee Chair Ross Hunter in today’s Seattle PI. that the issue is not as simple as just passing a 1% limit.

Senate Majority Leader Brown notes that “The 1 percent limit has been in place for 5 years and there are still people out there who are struggling with property taxes.”

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Washington State Income Tax Makes Sense

Posted on March 16th, 2007 | 3 comments

The Washington State Senate Ways and Means Committee held a hearing yesterday on two income tax proposals. Rumor had it that it was a token hearing and that they had no intent of doing anything. That’s unfortunate.

When you think about ways you can raise revenue to fund state services like education, health care, environmental protection and transportation, the income tax is the fairest way. If you are not making any money, you pay no tax. Pretty simple.

But property taxes on your home? You have to pay those regardless of how much money you make. Being unemployed is no excuse.

Sales taxes you also have to pay regardless of how much money you have earned. Right now we have the highest sales tax in the country. It makes no difference whether you are earning minimum wage or you are Bill Gates, you pay the same sales tax rate when you buy school supplies for your children and clothes and shoes.

Our heavy reliance on the sales tax and property taxes has earned us the dubious distinction of being labeled as having the most regressive tax system in the country. In a study released in 2003, the national Institute on Taxation and Economic Policy looked at the tax policies of all 50 states and issued a report: Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. The report found that:

Washington’s Tax Code: Soak the Poor and Middle Class, Spare the Rich

When all Washington taxes are totaled up, the study found that:
# The wealthiest one percent of Washington taxpayers—with average incomes of $1.6 million—pay only 3.3% of their income in Washington state and local taxes. After accounting for tax savings from federal itemized deductions the effective rate becomes just 3.2%.

# Middle-income Washington taxpayers earning between $31,000 and $48,000 pay 11.1% of their income in Washington state and local taxes, almost three and a halftimes the effective rate of the very wealthy.

# But Washington families earning less than $17,000—the poorest fifth of Washington non-elderly taxpayers—pay a whopping 17.6% of their income in state and local taxes, more than five times the rate on the best off.

The study found that Washington’s taxes are so extremely regressive because the state lacks an income tax and instead relies primarily on regressive sales and excise taxes to pay for public.

Washington’s tax structure has not changed since this report was issued. What has changed is that the Washington State Legislature has given out a slew of Tax Exemptions to special interests, increasing the tax burden even more on individual taxpayers.

As reported by Marilyn Watkins of the Economic Opportunity Institute in a 2006 report entitled Adding Up: New Tax Breaks in Washington 2004-2006:

“In the three legislative sessions from 2004 through 2006, the Washington legislature passed at least 61measures either granting new tax preferences or extending old ones. These new tax breaks will cost the state nearly half a billion dollars in the 2007-09 biennium.”

Of course any effort to enact an income tax has to be done in conjunction with overall tax reform. Shifting more of the burden to individual taxpayers is not acceptable. This includes a corporate income tax, critical performance audits of tax exemptions, reducing sales taxes and a property tax Homestead Exemption on one’s principal residence.

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