Question. Should I be thankful if a vampire offers me a band-aide for the puncture wounds on my neck? You might not have guessed that the band-aide I am referring to is Florida’s Homestead exemption, but I would like to take you on a little adventure to explore the revered exemption, and it’s nebulous counterpart, Save Our Homes and illustrate how they are regressive monstrosities. But mind you, the true story is that government is the vampire sucking the lifeblood out of all of us through over taxation, while we remain distracted on the merits of the band-aide they give us in return.
First, take a moment to go on line and review section 196.031 of the Florida Statutes. Well, obviously more than a moment because as you might see, the section is as tangled as the anchor line piled in my anchor well. But this is commonplace when government creates a “solution.” The idea is, that in order to assist Florida homeowners that reside in their primary residence, that the first part of their assessed property value be exempt from taxation. Or more appropriately, the vampire requires so much blood to sustain itself, that it offers a band-aide to “voters” and we should all be thankful.
The claim is that by exempting the first $75,000 of value and capping appreciation at 3%, (although again it is not that simple) it is “assisting” the lowest economic bracket to the greatest proportion. Uh-huh, sure. The first and most glaringly obvious dispute to that claim is the fact that rental properties do not receive the exemption. Anyone who thinks that a landlord does not pass the taxation on to the tenant is kidding themselves. Beyond that, if that tenant ever buys they will have to afford the taxes on the full assessed value of any property because the 3% cap does not transfer with a sale.
More interestingly, does the exemption benefit the lowest priced home, or the most expensive home? If you take a home assessed at $100,000, and one assessed at $1,000,000, which one benefits the most if over ten years both properties double in value? Initially (assuming the $75,000 exemption and 3% cap) the $100K home has a $75K exemption and pays taxes on $25K, while the $1MIL home has a $75K exemption and pays taxes on $925K. However, after ten years the $100K home has a value of $200K, is assessed at $130,477 and pays taxes on $55,477K, and really now enjoys an $144,523K exemption. Sweet. However, the $1MIL home now has a value of $2MIL, is assessed at $1,304,773 and pays taxes on $1,229,773, and now really enjoys a $770,227 exemption!
This isn’t a haves, haves-not debate. And I know that there are those of you out there that will make arguments about my ciphering, and want to change certain criteria to obtain a contrasting result. Also, I am aware that our legislators could provide a day’s dissertation on the history of the statutes and amendment, and all the hard work that went into crafting them in committee. That is my point exactly. The discussion is about the bandage, and not the cause of the wound. The vampire of over taxation is sucking the lifeblood out of all of us, then distracts us with a dirty band-aide for the fang marks on our neck.
If the moneysucker really wanted to provide us with a decent bandage for their financial phlebotomy, couldn’t they just exempt the first $75K of ALL taxable value of ALL properties, or is that too simple? Wouldn’t that treat everyone including tenants, businesses, lower priced homeowners and second homeowners equitably? Wouldn’t that eliminate the need to not only apply for, but qualify for the current twisted exemption? Wouldn’t that eliminate the consumption of resources tracking exemptions, and enforcing violations?
Enforcement? Yup. Another thrilling aspect of this well intentioned, feel good, band-aide is the fact that our law enforcement and Courts have to consume valuable resources trying to determine if someone actually violated the twisted rules. Did they actually qualify? Was the property rented on January 1, or January 2? Were they gone six or eight months? Was it a Tuesday, or a Thursday under a full moon when they applied??? Of course there will be violators, those that are simply confused, and those that intentionally take advantage of the loopholes and complexities of the legislation. So now we are consuming valuable resources with that silly game as well.
But again, this column is not about the band-aide of the Homestead exemption and it’s potential merits or pitfalls. It is about how we are constantly in need of a solution for a symptom rather than addressing the root cause of the problem. We are glad handed by politicians speaking of all the good things they are doing to help us by providing us with band-aides to symptoms while they obscure the fact that they themselves are the actual cause of the infliction to begin with.
Another example is the regressive gas tax to create jobs. Seriously? That is money taken directly from the lowest segment of our economy as they drive to work. Taxation that increases the costs of transportation of our products such as diapers and soup, which we then pay more for in the market. Wouldn’t us spending that money directly into the economy have the most direct effect on economic stimulus, or do we really need government to more effectively “redistribute” our money? What about the fact we need to pay for an occupational permit to be self employed? Yes, we actually need to pay government for the privilege of being employed vs. unemployed?!!?
It’s time to stop thankfully accepting band-aides, and turn our true attention to slaying the vampire of over taxation.
First, take a moment to go on line and review section 196.031 of the Florida Statutes. Well, obviously more than a moment because as you might see, the section is as tangled as the anchor line piled in my anchor well. But this is commonplace when government creates a “solution.” The idea is, that in order to assist Florida homeowners that reside in their primary residence, that the first part of their assessed property value be exempt from taxation. Or more appropriately, the vampire requires so much blood to sustain itself, that it offers a band-aide to “voters” and we should all be thankful.
The claim is that by exempting the first $75,000 of value and capping appreciation at 3%, (although again it is not that simple) it is “assisting” the lowest economic bracket to the greatest proportion. Uh-huh, sure. The first and most glaringly obvious dispute to that claim is the fact that rental properties do not receive the exemption. Anyone who thinks that a landlord does not pass the taxation on to the tenant is kidding themselves. Beyond that, if that tenant ever buys they will have to afford the taxes on the full assessed value of any property because the 3% cap does not transfer with a sale.
More interestingly, does the exemption benefit the lowest priced home, or the most expensive home? If you take a home assessed at $100,000, and one assessed at $1,000,000, which one benefits the most if over ten years both properties double in value? Initially (assuming the $75,000 exemption and 3% cap) the $100K home has a $75K exemption and pays taxes on $25K, while the $1MIL home has a $75K exemption and pays taxes on $925K. However, after ten years the $100K home has a value of $200K, is assessed at $130,477 and pays taxes on $55,477K, and really now enjoys an $144,523K exemption. Sweet. However, the $1MIL home now has a value of $2MIL, is assessed at $1,304,773 and pays taxes on $1,229,773, and now really enjoys a $770,227 exemption!
This isn’t a haves, haves-not debate. And I know that there are those of you out there that will make arguments about my ciphering, and want to change certain criteria to obtain a contrasting result. Also, I am aware that our legislators could provide a day’s dissertation on the history of the statutes and amendment, and all the hard work that went into crafting them in committee. That is my point exactly. The discussion is about the bandage, and not the cause of the wound. The vampire of over taxation is sucking the lifeblood out of all of us, then distracts us with a dirty band-aide for the fang marks on our neck.
If the moneysucker really wanted to provide us with a decent bandage for their financial phlebotomy, couldn’t they just exempt the first $75K of ALL taxable value of ALL properties, or is that too simple? Wouldn’t that treat everyone including tenants, businesses, lower priced homeowners and second homeowners equitably? Wouldn’t that eliminate the need to not only apply for, but qualify for the current twisted exemption? Wouldn’t that eliminate the consumption of resources tracking exemptions, and enforcing violations?
Enforcement? Yup. Another thrilling aspect of this well intentioned, feel good, band-aide is the fact that our law enforcement and Courts have to consume valuable resources trying to determine if someone actually violated the twisted rules. Did they actually qualify? Was the property rented on January 1, or January 2? Were they gone six or eight months? Was it a Tuesday, or a Thursday under a full moon when they applied??? Of course there will be violators, those that are simply confused, and those that intentionally take advantage of the loopholes and complexities of the legislation. So now we are consuming valuable resources with that silly game as well.
But again, this column is not about the band-aide of the Homestead exemption and it’s potential merits or pitfalls. It is about how we are constantly in need of a solution for a symptom rather than addressing the root cause of the problem. We are glad handed by politicians speaking of all the good things they are doing to help us by providing us with band-aides to symptoms while they obscure the fact that they themselves are the actual cause of the infliction to begin with.
Another example is the regressive gas tax to create jobs. Seriously? That is money taken directly from the lowest segment of our economy as they drive to work. Taxation that increases the costs of transportation of our products such as diapers and soup, which we then pay more for in the market. Wouldn’t us spending that money directly into the economy have the most direct effect on economic stimulus, or do we really need government to more effectively “redistribute” our money? What about the fact we need to pay for an occupational permit to be self employed? Yes, we actually need to pay government for the privilege of being employed vs. unemployed?!!?
It’s time to stop thankfully accepting band-aides, and turn our true attention to slaying the vampire of over taxation.
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