Many residents struggle to live in the District amidst rising costs. One way DC government can help is to provide property tax assistance to low- and moderate-income households whose earnings remain largely stagnant as housing prices continue to rise.
Yesterday, DCFPI testified on a bill that would eliminate property taxes for senior citizen homeowners who are long-term residents. Our testimony expressed support for the goal to help residents struggling with high housing costs, but noted that DC already has a number of programs to assist lower-income seniors with their taxes. DCFPI also raised concerns that the structure of the bill would grant tax relief to some residents, but not others in similar situations. We suggested that DC focus on implementing its current low-income property tax relief mechanism, Schedule H, which was recently updated to improve its reach and effectiveness.
The bill now under consideration, the Senior Citizen Real Property Tax Relief Act of 2013, would exempt anyone who is older than 75, has lived in DC for 25 years, and has less than $60,000 in adjusted gross income from paying any property tax. While DCFPI shares the important goal of providing assistance for residents struggling to live in the District, it is important to note that DC already has a number of mechanisms that help low-income seniors, including:
* Schedule H. DC’s low-income property tax credit, available to both renters and homeowners, was recently expanded to provide assistance for residents with incomes up to $50,000 and was enhanced to expand its effectiveness. The Chief Financial Officer estimates that up to 15,000 seniors aged 65 and over could be helped under the improved Schedule H. And even if credit participation isn’t 100 percent, which it usually is not for most credits, Schedule H will help many seniors struggling with high housing costs. In this upcoming filing season, as DC has expanded Schedule H, our government should also expand efforts to make qualified residents aware of this important tax credit.
* Property Tax Reductions. DC reduces the property tax rate by 50 percent for seniors 65 and older with adjusted gross incomes under $100,000 (under $125,000 as of January 1, 2015).
*Exemption of Social Security Income from Tax. DC entirely exempts social security income from income tax.
The proposed bill would provide complete property tax relief to some households, but no assistance to others in very similar situations. For example, a 75-year-old resident who has lived in DC for 20 years would not qualify for tax relief, while a 75-year-old resident who has lived in DC for 25 years would get a complete tax exemption. The bill only applies to homeowners, even though a large share of residents are renters. Lastly, the proposed bill does not include a mechanism to target residents with the greatest need — providing the same relief for someone earning $20,000 as it would for someone earning $55,000 a year.
For these reasons, DCFPI believes that the proper approach is to move forward with Schedule H expansion and then assess whether there are remaining gaps in tax assistance that might need to be addressed. Schedule H is well-targeted, providing the greatest relief to those who face the highest property taxes as a share of their income, and is available to both homeowners and renters.
To read the complete testimony of DCFPI Policy Director Jenny Reed, click here.
To print a copy of today’s blog, click here.
