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Florida Property Tax Cut: Only for Seniors for Now

2 min readBy: Gerald Prante

The issue of property taxes is continuing to heat up in Florida. But before any major reform is done, Florida Governor Charlie Crist has cut property taxes for one select group: senior citizens. From the Orlando Sentinel:

Gov. Charlie Crist on Monday signed into law a bill that will give low-income seniors a property-taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. break.

The measure (HB 333), which implements a constitutional amendment approved by voters last fall, increases the homestead exemption from $25,000 to $50,000 for residents 65 and older whose income does not exceed $23,414 in 2007.

“We have an obligation to provide our state’s seniors the utmost respect and dignity,” Crist said. “Unfortunately, high property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es are forcing many seniors to choose which bills they can afford to pay. This legislation provides additional help to those who need it most and can help make living in Florida more affordable.”

Special property tax laws in favor of senior citizens are popular, but they are not a free lunch. They must be offset by higher taxes on everyone else or through cuts in spending.

The question obviously is why should low-income seniors receive such special treatment from the property tax? If ability to pay is the concern, why are low-income seniors any different than a low-income 35 year old? If the argument is that they benefit less from the public services that property taxes fund (namely education), then if government can determine who benefits from these services like they would be claiming to do in this case, then that is merely an argument for privatization of those services. That is, those who use the service would pay for the service. It’s doubtful that lawmakers would like to go down that road, especially with regards to education.

Also, why should only low-income senior homeowners receive tax relief? Those low-income seniors who live in rented communities are more likely to be strapped for cash than those with similar cash incomes who own a home as they are not sitting on an asset called a house. Furthermore, these renting seniors are having to pay their rent check with income that has been taxed, while homeowners received implied rent tax-free merely by owning a home. Unfortunately, this provision will force taxes up on everyone else, including landlords who own the apartments in which these other low-income senior renters live, who are forced to pay higher rents as a result of the tax hike.

Unfortunately, the reasoning for this policy likely lies in the political arena than in the area of sound tax policy.