Testimony of Ed Lazere, Executive Director, on The Schedule H Property Tax Relief Act of 2011| November 16th, 2011 | PDF of this report
Chairman Evans and other members of the committee, thank you for the opportunity to testify today. My name is Ed Lazere, and I am the executive director of the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on policies that affect low- and moderate-income residents.
The bill before us today would address longstanding problems in an important but neglected tax benefit for low-income homeowners and renters. The changes would help the Schedule H tax credit reach a far larger share of the eligible population — currently fewer than one in five potentially eligible households get help — and it would provide aid to thousands of residents struggling with high housings costs.
Schedule H is a “circuitbreaker,” a property tax credit for homeowners whose property taxes take up a large share of their income. Many states have such tax credit programs, which are designed like an electrical circuitbreaker to cut off property taxes when they become too burdensome.
Circuitbreaker programs are important because the property tax is tied to what your home is worth — not what you earn — which means there can be times when someone’s property taxes are high relative to their income. Think about a retiree whose home is in the middle of a gentrifying neighborhood, or a homeowner who lost her job and is having trouble paying bills.
Property taxes affect renters, too, since landlords pass on their expenses to tenants through the rents they charge. Given DC’s incredibly high and rising rents, property taxes add to the challenges low-income residents face paying rent each month.
Schedule H helps both homeowners and renters by offering a tax credit of up to $750 when property taxes are high relative to income. (Under Schedule H rules, 15 percent of rent is considered a property tax equivalent.) This is especially important in the District right now, given the large rise in home values and rents over the past decade. Schedule H provides modest but important assistance to the thousands of households who face very high housing costs and cannot get access to the limited supply of subsidized housing.
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