Moving ahead on tax relief

Published May 20, 2007

There is a glimmer of hope in the debate over property tax relief. There is hope because House Speaker Marco Rubio has given up on a tax swap that was politically and economically unworkable. But it is only a glimmer because the Miami Republican remains determined to cut property taxes so deeply it would devastate local government programs and services. It will be up to the Senate again to apply restraint.

Providing tax relief by assessing all property at a percentage of fair market value as House Republicans now propose is a concept worth discussing. It is more progressive than the previous proposal to eliminate property taxes on homesteads and raise the sales tax. It would provide the most benefit to newer homeowners and to businesses, two groups of taxpayers who need relief the most. It would offer immediate relief and long-term benefits, such as making it easier for homeowners to buy another house.

There are several ways to pursue this concept, which a joint House and Senate committee will discuss Monday. The simplest approach would be to assess all property at a reasonable percentage of fair market value, providing some relief to taxpayers without crippling local governments. It could be in addition to the current $25, 000 homestead exemption, and it could leave existing Save Our Homes tax savings in place.

Other approaches are more complicated. House Republicans propose a tiered set of percentages for homesteads - as the value of a homesteaded house goes up, so does the percentage of value that is taxed. That would make it more progressive. It would replace the existing $25, 000 homestead. It also would phase out Save Our Homes, because Republicans believe most homeowners would receive an even larger property tax cut than they do now. House Democrats offer another variation that would preserve the existing homestead exemption and add an additional "super-homestead" tax exemption equal to half the median home value in each county.

All three variations are worth a thorough analysis to evaluate their fairness and impact on both taxpayers and local government. Whether all of the ramifications of the more complicated proposals can be digested by next month's special legislative session is another question. The worst outcome would be to put a complex tax relief plan before the voters that no one understands and produces unintended consequences.

Even if legislators can agree on the concept of assessing property at a percentage of fair market value, there are any number of serious questions left to be resolved.

What percentage exemption would provide adequate tax relief without strangling local governments? The percentages thrown around by Rubio reflect his dislike for property taxes and animosity toward local government - and they are out of touch with reality.

What would it take to persuade voters to repeal or phase out Save Our Homes? Last year, a quarter of all taxable value on homesteads was protected by Save Our Homes. That is why the tax burden has been shifted to investment properties and businesses.

How would schools, cities and counties with small tax bases, and special taxing districts be protected? Remember, school property taxes account for 40 percent of the property tax bill - and no one wants to reduce public school spending.

A new property tax exemption that equals a percentage of the fair market value may be a concept worth examining. Whether voters should be asked to put it into the state Constitution won't be clear without a careful study of the details.