Oregon Property Tax Aid Program For Seniors Under Fire
April 10th, 2011
A program provided by the state of Oregon to help senior citizens who cannot afford their property taxes remain in their homes is facing some criticism following an investigative report by the Oregonian indicating that the state’s Department of Revenue is paying taxes for “nearly 200 residents whose homes are valued at more than $500,000” and for eight residents with homes valued in excess of $1 million[1]. As long as homeowners are at least 62 and have a taxable income of no more than $39,500, then participation in the program is legal. When the property owner dies or sells the home, the state receives all money lent for taxes at a rate of 6 percent interest. However, the state’s Department of Revenue recently sent out an alert than funding for the program is running low[2]. As a result of the alert, recipients of the money have fallen under scrutiny and those who live in “moderately priced homes” feel that some people may be working the system. “You can have a substantial amount of income that’s not counted,” explains legislative liaison for the Department of Revenue John Phillips. The program cannot consider stocks, home equity, tax-exempt income or how long a person can own a home when determining eligibility.
It appears that this has not previously been much of an issue because the program has been historically “flush” – so much so that lawmakers took $14.2 million out of the program in 2008 to pay for other programs. Now, however, with many homes underwater and selling far below previous values, the program has an uncertain future at a time when the number of people asking for help with property taxes has spiked by 25 percent. According to the Department of Revenue, the fund is $27 million short of what it needs to cover properties currently in the program through June 2013. 2011’s property taxes also have not been paid in full and likely will not be. The program notified counties of the shortfall less than five days before taxes were due. “It’s a promise that the state made but it’s not keeping,” says one county assessor.
Given that all the homeowners in the program met the initial requirements, is it fair to potentially “kick out” people who might be able to pay their taxes in some other way? Should the government be somehow held responsible for their withdrawal of money in 2008?
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[1] http://www.mysanantonio.com/default/article/Ore-program-pays-property-taxes-on-ritzy-homes-1330913.php
[2] http://www.oregonlive.com/politics/index.ssf/2011/04/oregon_state_program_pays_prop.html
April 13th, 2011 at 2:19 PM
Oregon (and the Federal government) have to start means-testing every benefit dollar. First, we need a Federal definition of middle class. I propose the middle 40% of all US citizens, as determined by income + benefits, where benefits include some measure of net worth. The upper income limit on “middle class” would probably be around the current last dollar that has social security taxes taken out ($106,800/year), and nowhere near Obama’s $250K figure for tax relief, while the upper wealth limit would probably be no more than twice that, given the general savings rate of practically nothing. In fact, the average person’s quantifiable wealth consists of his house equity plus what his belongings could fetch at an estate sale. So, using for housing the figures of 33% of income and 7% mortgage loans at 80% LTV, you get a upper house market value of $400,000 (rounded up), beyond which nobody should get a plugged nickel for mortgage assistance or mortgage interest deduction, with the possible exception of multigeneration families.