My OpEd ran in today’s Moscow-Pullman Daily News. Enjoy!
Home
property taxes are the most insidious of all taxes. If you don’t pay, the
government will confiscate your property and sell it to someone who will pay. This means you do not actually own your property
but are merely renting from the government. The most vulnerable within this
system are the elderly and those on fixed incomes.The AARP warned its members that predators are targeting homes of the elderly over unpaid property taxes. “In 30 states and the District of Columbia, city or county governments have the legal authority to sell property-tax liens to private debt collectors, which can not only charge interest rates as high as 50 percent on the outstanding balances but also add legal fees and other costs they claim to incur in dealing with delinquent homeowners. If a homeowner doesn’t settle up for the back taxes, penalties and fees within a certain period — from, say, six months in D.C. to up to four years in South Dakota — many jurisdictions allow the tax-lien holder to file suit to begin the foreclosure process to take ownership of the properties and resell them.” This story is repeated across our country. In 2014, US property tax delinquencies totaled nearly $15 billion.
The
Seattle Times reports that a family bought a home in Kirkland in 1980 for $50,000. Today the home is appraised at $1.2 million, and the retirees cannot afford the property taxes on their fixed income, so they were forced to sell and move. Yes, they made a nice profit, but they should not be forced to sell their home because of their fixed income.Closer
to home, there was a report of a Coeur d’Alene woman also losing her home. She
had been born in the house, inherited it from her late parents, and ultimately
had to sell the home because she could not afford the property taxes with her Social
Security.Latah County already
had the fourthhighest property taxes in Idaho before the recent bond. The Daily News reports that Moscow
property taxes are now going up another 25% in 2020 and Latah County property taxes as
much as 36%.19%
of the Moscow tax increase was due to the $10 million bond that voters passed
for the new police station; and while the need for a new police station was
real, the solution was wrong. Why does it cost Moscow so much when Pullman
has one third the city payroll and much less office space than Moscow? Why was the old police station not sold to offset the $1.5m costs to remodel and now to maintain?Moscow
Mayor
Bill Lambert wrote to the Daily News about the reason for the 25% tax increase to the city’s current $86
million budget. However, there was never a discussion that taxes would increase another 6.5% on top of the 19% that voters just approved. The first discussion I know occurred
on 8 July, seven weeks after the levy past. Was this not discussed beforehand to ensure that the police station and city facilities levy would first pass?Renters
sometimes assume that they do not pay property taxes. In reality, renters pay
more in property taxes than homeowners do because homeowners have up to
$100,000 in homestead exemption that reduces their property tax burden. Landlords
have no homestead exemption, however, and the full tax is passed directly along
to renters. My son rents a home in Moscow, and he was told that the rent is
increasing 25%.The
insidiousness I mentioned is how property tax debt is collateralized. No other type
of loan collateralizes a $3000 debt with a $275k asset. Currently if you are
unable to pay your property taxes, the state confiscates your $275k home and
sells it to get its $3000. And this is often where predators target the
elderly.We have seen this concept extended to “asset forfeitures” by the police. As the ACLU notes, “civil forfeiture allows police to seize — and then keep or sell — any property they allege is involved in a crime. Owners need not ever be arrested or convicted of a crime for their cash, cars, or even real estate to be taken away permanently by the government.”
To deal with this property tax problem, we first need to stop taxing private residences. A person’s home does not generate income, and therefore it is unjust to tax it simply on the basis that it exists.
Second,
we need to separate assessments from collections. Like dealing with other
debts, unpaid property taxes should go to collections or have wages garnished.
But disproportionate seizure of properties is evil and is no way to treat homeowners,
especially the elderly.Winston Churchill’s said “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” Moscow politicians seem to believe that the more money they take from residents, the more prosperity they can spread around. Just the opposite is true. Especially for retirees.