In this article, we investigate how property taxes affect elderly persons, looking at many state initiatives that try to help and considering the possible financial ramifications of doing away with property taxes.
The administration of Governor Josh Shapiro in Pennsylvania has launched the Property Tax/Rent Rebate Program (PTRR) in an effort to assist the elderly and those with disabilities. About 442,000 eligible individuals will begin receiving $266 million in refunds for rent and property taxes paid in 2023 as part of this program on July 1, 2024. According to CBS News Philadelphia, the Governor's program was expanded to include 175,000 new beneficiaries, addressing the financial concerns of seniors across the state.
"After hearing from seniors across the Commonwealth that we needed to do more to cut costs and put money back in their pockets, my Administration put in the hard work to expand the Property Tax/Rent Rebate program for the first time in nearly 20 years," stated Shapiro.
In a similar vein, Washington State has changed its long-standing property tax exemption scheme for senior citizens and individuals with disabilities. More Washingtonians now qualify due to a 44% rise in the qualifying income level. In King County, a Seattle Times report notes, the income cap has been raised to $84,000.
Christina Clem, spokesperson for AARP Washington, explained just how significant this program is, saying, "Even if you have your home paid off, if you can't afford the property taxes, that's a problem." The expansion of this program has resulted in a surge of applications, with King County receiving nearly 6,600 applications so far this year, surpassing the total for the entirety of 2023.
Some states are considering doing away with property taxes entirely. In the short term, this plan could help homeowners—especially the elderly—but in the long run, it presents significant financial difficulties. The majority of local governments around the country primarily rely on property taxes to support vital services like infrastructure, public safety, and education. To keep these services going, it would be necessary to find other sources of funding if property taxes were eliminated.
Boston Mayor Michelle Wu has proposed a temporary adjustment to the city's residential-to-commercial property tax ratio to address the potential decline in office property values due to remote work and high interest rates. Homeowners may see a 33% rise in property taxes in the absence of this modification. Under Wu's proposal, older business properties would have a minor drop (8%), while homeowners would see a lesser increase (9%). This idea has encountered opposition from lawmakers and has proved contentious. Homeowners may face significant financial hardships if it fails, particularly in upscale neighborhoods like the Back Bay.
As the population of the United States ages, the possibility of doing away with property taxes creates questions regarding the viability of state and municipal budgets. Property taxes play a vital role in supporting local government operations, emergency services, and public education. States would have to find alternative sources of funding without these monies, such greater income or sales taxes, which would disproportionately impact citizens with lower incomes and undermine overall economic competitiveness.
In Washington, counties have not seen a decline in revenue as a result of the growth of property tax relief programs. Because the budget-based method of determining property taxes causes the tax burden to transfer to other property owners as more persons become eligible for exemptions, the plan and similar initiatives are not widely supported.
Property taxes have two drawbacks. They may place a significant financial strain on older persons while simultaneously providing vital funds from coast to coast. Long-term solutions are still difficult, despite efforts by states like Pennsylvania and Washington to lessen this cost through rebate and exemption schemes.
It is critical to strike a balance between the need for revenue and the financial security of vulnerable groups, especially elderly, as politicians continue to look for answers.