“Our seniors mustn’t pay property taxes,” says Rep. Nancy Mace (R–S.C.).
Usually, I would advise in opposition to paying a lot consideration to what Mace says and even much less to what she posts on Twitter. Mace is without doubt one of the most performative and vapid members of Congress—a tall process, in case you’re aware of her competitors. She’s most well-known for having meltdowns in airports, participating in bizarre bits of efficiency artwork, and terrorizing staffers, all apparently guided by the previous axiom that there is not any such factor as dangerous publicity.
However there’s such a factor as dangerous coverage, and Mace’s endorsement of increasing property tax breaks for senior residents is strictly that.
Sadly, that is an concept that appears to be immediately gaining traction with extra critical Republican elected officers. Indiana Gov. Mike Braun informed reporters this week that he is hoping to create a brand new tax break for older residents who’ve paid off their mortgages.
“When you get to 65, possibly you must have some reduction from your individual authorities to not have property taxes after that,” he mentioned.
Sure, as a libertarian writing for a libertarian publication, I’m obligated to pause for a second and acknowledge the apparent truth: Decrease taxes are higher than increased taxes. Authorities coverage ought to all the time be oriented in direction of permitting individuals to maintain extra of their very own cash, quite than obligating them to shovel it into the bottomless maw of presidency in any respect ranges.
However specialised tax breaks for individuals inside sure age brackets make little or no sense—they usually do not really decrease taxes. If the federal government doesn’t scale back the price of public companies, then a particular tax break for one group merely forces everybody else to choose up the slack.
A particular tax break focused particularly to senior residents is worse. The median family headed by somebody over age 65 had a web value of greater than $400,000 in 2022, in keeping with Federal Reserve information. For these beneath age 35, the common was $39,000. Nonetheless you have a look at it, aged owners are plainly not a demographic that’s desperately in want of tax reduction—and giving property tax breaks to the previous means pushing your complete property tax burden onto comparatively poorer households.
It is also essential to needless to say senior residents are overwhelmingly the largest beneficiaries of presidency spending. Social Safety and Medicare account for greater than one-third of all federal spending—and people “expenditures on the aged dwarf all different publicly funded welfare advantages,” as Chris Pope, a senior fellow on the Manhattan Institute, has famous. Seniors are, on common, gathering way more in Social Safety and Medicare advantages than what they contributed throughout their working years.
The federal authorities’s huge wealth redistribution machine is showering older Individuals with cash seized from the paychecks of youthful, typically poorer, working-age individuals. However when it comes time for senior residents to assist pay property taxes—which foot the invoice for faculties and different state and native authorities companies in most components of the nation—politicians wish to give the olds a free cross. How is that honest? The place’s the payroll tax break for Individuals beneath 40?
Exempting older individuals from property taxes has some unlucky unintended effects, too.
Sure, the intention behind these insurance policies is to make it simpler for Granny and Gramps to remain of their dwelling as they develop previous. However downsizing ought to be a standard a part of life. More and more, it is not. A 2024 survey from Freddie Mac discovered that almost 70 % of child boomers—who account for 20 % of the U.S. inhabitants however 36 % of all owners—deliberate to remain of their houses for the foreseeable future.
That is fantastic for them, but it surely reduces the variety of houses available on the market, and the lowered provide doubtless will increase housing costs for everybody attempting to purchase.
On the identical time, do not forget that exempting or lowering taxes for some individuals means pushing extra of a tax burden on everybody else—on this case, all owners beneath age 65.
In different phrases, youthful Individuals who wish to purchase a house are going through artificially low provide, the ensuing increased costs, after which (if they’re able to afford a home regardless of these hurdles) find yourself owing a bigger share of the property tax burden. All in order that rich retirees can maintain their empty nests.
Authorities coverage would not must (and should not) assist boot Boomers out of their houses. Nevertheless it additionally should not assist them keep there longer.
The ultimate kicker right here is that Mace’s and Braun’s states—like most states—already supply some type of property tax reduction to senior residents. South Carolina exempts the primary $50,000 in property worth from taxation, however just for residents over age 65 (or disabled or blind). Indiana mechanically reduces seniors’ tax payments by as much as $150.
Politicians are understandably in search of methods to deal with Individuals’ worries about the price of dwelling. Even so, these proposals to get rid of property taxes for senior residents quantity to nothing greater than a promise to ship much more particular tax remedy to a cohort that is wealthier than common, receiving outsized authorities advantages, and already getting particular tax remedy.
As an alternative of promising extra tax breaks for senior residents, we want elected officers who will reverse these silly insurance policies already on the books. Mace is unsuitable. Our seniors ought to pay property taxes, identical to everybody else.
