Brett Mandel and his merry band of reformers at Philadelphia Forward are at it again. His latest email/call-to-action encourages folks who just had their houses reassessed by the Board of Revision of Taxes to appeal those assessments.
He even provides all of the language to use on the form:
Attach the following language to your appeal to demonstrate that you understand that all properties are to be treated uniformly, but that in Philadelphia the entire assessment system is fundamentally flawed...(feel free to cut and paste and print it out to attach to your appeal)
Though it's not explicity stated, I think he may be trying to pick a fight that ends up in the Commonwealth Court system, at which point, the Court would almost certainly have to rule that the current assessment system violates the state constitution's "uniformity" rule:
The Pennsylvania Constitution demands that "all taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax." The city is in comprehensive violation of uniformity and the most-recent assessments do not correct the problems. The assessment lacks uniformity with other properties within the taxing jurisdiction and is therefore illegal, improper and unjust.
Such a ruling would pretty much force the city to make the changes necessary for full/fair market valuation. The BRT has been preparing for this for a while and has completed the citywide reassessment, so they could probably have the new assessments out pretty quickly. That would put the ball squarely in the court of elected officials, who would then be responsible for setting the tax rates and putting the mechanisms in place to protect low-income folks from sharp increases in their tax bills.
Or maybe Philadelphia Forward is just trying to help people get their tax bills lowered.
This gives us a chance to review one of the actual policy differences between Al Taubenberger and Michael Nutter.
Click "Continue Reading" for details.
In his coverage of the last week's candidate appearance at the Free Library of Philadelphia, Inquirer's Larry Eichel summed up this difference:
One area of disagreement did emerge: how to deal with the planned move to full-value reassessment of residential properties in the city.
Democrat Nutter said that he supported the shift, if it could be done in a revenue-neutral fashion and with safeguards to limit annual tax increases for homeowners, particularly seniors and people with low incomes.
But Republican Taubenberger opposed it, saying that the assessment of a home should be based on what the buyer paid for it - regardless of when it was purchased - rather than current value.
We already mentioned what groups like Philadelphia Forward say are the problems with Taubenberger's idea of capping the assessment at the purchase price, so I won't go into that again.
So let's review Nutter's policy paper on housing for more details on what he would do about this (page 5):
...I support a fair and accurate city-wide property reassessment. However, this is only one step in the process. The Board of Revision of Taxes sets the property values. It is the Mayor and City Council that set the tax millage rates. This must be done carefully, so that the reassessment does not harm our residents.
As Mayor, I will work with City Council to implement two-part reform of our property tax system.
• First, I will propose and work with City Council to enact a homestead exemption that will exclude some fraction of assessed value from taxation for all property owners. The value of the exemption will be calculated to have minimal impact on overall revenue generated by the property tax and will make the property tax progressive.
• Second. I will propose and work with City Council to enact a cap and deferral plan for paying property taxes that will protect property owners from unreasonably large and rapid increases in their taxes. Under my plan, no property owner would ever face an increase in their property tax exceeding 10 percent in a single year. Property owners who qualify on the basis of low and/or fixed incomes would have lower caps, including zero increases for very low-income owners. In all cases, the amount of tax owed by the property owner above the capped amount would be deferred until the sale of the property.
Does it seem complicated? The second part is easy to explain. If you live in a neighborhood, such as Northern Liberties or Queen Village, that has suddenly become "hot" and seen property values skyrocketing. Your property taxes, as a reflection of the full value of your home, will clearly go up equally as fast. With this safeguard in place, your taxes will never go up more than 10% from the previous year. Any increase in property tax over and above that 10% (or lower if you make less money) will be deferred until you sell the house, at which point you (or your heirs) pay the city. You're never forced to sell your home because you can't pay your taxes and if you do "cash out" and take your well-deserved windfall for sticking it out during the bad times, the city gets its cut.
As for homestead exemption, Wikipedia is as good a place as any other for a workable definition:
A homestead exemption is most often only on a fixed monetary amount, such as the first 50,000 dollars of the assessed value. The remainder is taxed at the normal rate. In this case, a home valued at 150,000 would then only be taxed on 100,000; a home valued at 75,000 would only be taxed on 25,000.
The exemption is generally intended to make the property tax a progressive tax. It is sometimes applied only (or more generously) to the elderly, which are frequently on a fixed income.
So if (for example) the homestead exemption is worth $75,000 and you're a lower income individual whose house is worth $75,000, you pay nothing. A higher income person, who most likely would have a house worth much more (say $500,000) would pay taxes on $425,000 of the houses value. Hence, the "progressiveness" of the plan. The real winners are very rich folks who choose to live, for whatever reason, in very low-valued homes. The losers, of course, are low income folks whose houses somehow shoot up in value to astronomical levels. But for them, the aforementioned cap-and-deferral option provides protection.
Let's see if Philadelphia Forward or the BRT have anything to say about these ideas.
BRT seems ok with the homestead exemption idea:
...the BRT has no intention of implementing Full Value in the absence of tax relief protections for property owners in the city. Real Property tax relief protections such as homestead exemptions and property tax phase-ins are under consideration for legislative action by City Council and the state legislature. We urge your serious consideration, debate, and eventual passage of the necessary property tax relief measures.
Philadelphia Forward doesn't mention the homestead exemption (as far as I can tell) but agrees with the idea of the cap-and-deferral idea that would allow low income people to defer paying the full load until they or their heirs sell the house:
Create Real Estate Tax deferments so vulnerable homeowners can live in their homes today and pay their tax burden in the future when they sell their homes.
So it seems that, at least according to some of the experts on this issue, Nutter's plan seems workable and more likely to fix the "broken-ness" of the property tax system.
Now... can he get City Council to go along?
Comments (2)
We can't make property tax based on income.
"Any increase in property tax over and above that 10% (or lower if you make less money) will be deferred until you sell the house, at which point you (or your heirs) pay the city. You're never forced to sell your home because you can't pay your taxes."
Kids, this is the system we have now. People cry poverty, the city doesn't care to work that hard to check. People inherit property but won't probate it with an owner who lives in this century, but everyone in the house has costs to the city in real time for schools, police, incarceration, services, infrastructure improvements, etc.
You can't inherit a house and pay grandma's property tax rate from 1974. Costs are not in 1974. Teachers don't still make 12K a year, nor do police cost $20K a year with bennies.
People who can't or won't pay their taxes are called renters. That's how not to have rotten schools and blood red streets -- the only way.
Posted by elleJAY | September 26, 2007 5:25 PM
OK, let's get this straight -- you inherit a house for a couple dollars. You've always lived in it, so you've never had a mortgage or rent.
You have low income, and can't pay the property taxes.
I'm supposed to pay your property taxes for you, yet I paid rent, now a mortgage, now twice as much property taxes as your house on my block is assessed for?
Time to get people in Philly who can be responsible owners who can cover the basic costs of their fairly assessed footprint in today's dollars.
Why does PHA not pay property taxes at all, for example? They should at least have a basic rate. Like basic cable. You want cable, you pay a base rate. My neighbors on Carpenter pay like 200-300 A YEAR in property taxes. For them to lose their house takes a decade.
People yes, a decade. For me, I get to pay a cool $1800 a year, thanks. That's with a ten year partial abatement.
So I'm a little fed up with the save the deadbeat owners movement. Pay yo' bills, mah brutha. Sell your guns, for example. Grandma, just turn in junior's gun collection for cash. No problemo, senor.
I swear that if we make all these exemptions, everyone will be poor and crying about how they can't pay. Schools will stay awful. We need to make up for federal funding for police, and we do that with property taxes.
The same people who are not paying are often the ones killing off a generation and filling the prisons, so where's the problem? Kill two birds with one stone.
Philly is still trying to be the low income donut in an area of high values and high costs. It's only going to benefit the poor if they move to where jobs are plentiful and costs are lower.
Why the fight to keep the poor rigidly in place where schools are bad and good opportunities are limited for them?
If I can be expected to move to where the jobs are that fit my skills, why is the low income voting block got a whole different set of rules?
Seperate but equal? The only reason for the ghetto in this day and age is policy. Trying to force people to own 200 year old houses is running them down, not lifting them up. The city can't keep underwriting these owners for cheap votes.
Every owner has to pay at least $1000 a year. That's a truly fair cost of a footprint. That's going to have to happen sooner rather than later.
Posted by I scratch my head | September 26, 2007 5:43 PM