December 16 — It’s a very exciting day for John Brady, owner of Topretirements.com: his Op-Ed feature on the need for Property Tax Reform, Time to Retire the Property Tax, was featured as an Op-Ed in the Connecticut section of today’s Times.
The thesis in his Op-Ed is that archaic property tax laws are not only unfair, but that they also hurt education budgets.
As many retiring baby boomers have already figured out, property taxes bear no relation to a person’s income or financial assets. In retirement this tax becomes a much larger percentage of a person’s new, reduced income (and you can usually assume there will be big annual increases). Many states have passed laws to protect full-time residents and retirees against unreasonable increases. Florida’s Save our Homes law is one of the most successful – it caps annual increases in assessed value at 3%. One of the most frequent questions asked in retirement forums is: “what are the most tax-friendly states?”
Increases in assessed value that occur in volatile real estate markets cause the most mayhem with property taxes. After a new assessment some homeowners see their taxes increase dramatically, severely affecting their ability to pay. Other homeowners, however, actually see their tax bills decline. Brady’s argument that the property tax hurts education is centered around that phenomenon – that the property tax is not as efficient as an income tax in collecting revenue from everyone who has the ability to pay.
Every state has property taxes. A relatively small number have municipal income taxes. The challenge Brady proposed to a very tradition bound CT legislature is to permit municipal income taxes as a way to accomplish 2 purposes: achieve better tax equity, and generate more revenue. Stay tuned!