Now for Part II of our look at property tax proposals likely to be on the DC Council agenda Tuesday. As we wrote yesterday, the two bills were not a part of the Tax Revision Commission’s recent set of recommendations on ways to improve DC’s tax system and run counter to the commission’s stated goals of fairness, transparency, and equity. For these reasons, DCFPI urges councilmembers to oppose these bills.
Today we look at the Senior Citizen Property Tax Relief Act of 2013. DCFPI agrees with the overall goal of this bill — to provide assistance to DC residents struggling with high-housing costs — but believes it is not the most effective way to target property tax assistance to those who need it the most. The legislation proposes to eliminate property taxes for residents who meet three categories: aged 75 or older, have lived in DC for 15 years or more, and have adjusted gross incomes of less than $60,000.
However, it’s important to point out that DC already has a number of tax provisions that help low-income seniors. In addition, the bill completely eliminates property taxes for some seniors, but not others in similar situations which raises several concerns about its structure. Given that many residents, including seniors, live on largely stagnant incomes, rising housing costs certainly are an important concern. Yet DCFPI believes that the recent expansion of an effective program already available to seniors ‘ Schedule H — is the right approach to provide property tax assistance to those who are struggling with high housing costs.
Currently, DC has three major programs to provide tax relief to low-income seniors:
- DC reduces property taxes by 50 percent for seniors aged 65 and older who have adjusted gross incomes of $100,000 or less ($125,000 or less as of January 1, 2015);
- DC exempts social security income from tax; and
- DC’s Schedule H program provides property tax assistance to low-income renters and homeowners whose property taxes are too large a share of their income. Just last year, the Council adopted improvements to the program to expand its reach and effectiveness. It is estimated that that up to 15,000 seniors aged 65 and older would be eligible for the Schedule H credit once the improvements are implemented.
Together, these programs greatly reduce taxes for seniors in DC.
The bill would also completely eliminate property taxes for some seniors, but not for others in similar situations which raises concerns about its structure. For example, a senior who is 75 and has lived in DC for 12 years gets no assistance, while a senior who is 75 and has lived in DC for 15 years does. A long-term senior homeowner is eligible for assistance while a long-term senior renter is not, even though a large share of older residents are renters. Lastly, the bill does not target assistance on those who need it the most — a senior earning $15,000 in income would get the same assistance as a senior earning $55,000 in income.
For these reasons, DCFPI believes that the Schedule H program — DC’s low-income property tax credit — is the most effective program to provide low-income property tax assistance. It is available to both homeowners and renters and is well targeted, providing the greatest share of assistance on those residents who have the highest property taxes relative to their income. In addition, the Council recently funded improvements to the program — for example, increasing the income eligibility to $50,000 and the maximum credit to $1,000 ‘ which will help ensure it reaches more residents in need and provides greater assistance.
DCFPI urges the Council to implement the recent improvements to Schedule H and then assess if there are any gaps in assistance. If there is concern that residents with income between $50,000 and $60,000 need assistance, then the Council should consider expanding the income eligibility of Schedule H.
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