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Property-tax relief for elderly now freighted with political baggage

Mark Reutter, Business Editor
217-333-0568; mreutter@uiuc.ed


CHAMPAIGN, Ill. — Are property-tax relief programs for the elderly justified in an age of shrinking government revenues and scaled-back public services?

The question has taken on sharp political overtones as partisans from both sides of the issue have made themselves heard in town halls and legislative chambers around the country. “This issue looms larger today than ever before,” Matthew J. Meyer writes in the current issue of the Elder Law Journal, a publication of the College of Law at the University of Illinois at Urbana-Champaign.

Be it homestead credits, tax deferrals or a circuit breaker program, “some method of property-tax relief has been made available to elderly homeowners in every state and the District of Columbia,” Meyer, managing editor of the journal, pointed out.

The first property-tax relief program for senior citizens was enacted in Utah in 1898, and since then state and local governments have adopted and changed tax-relief programs “in search of the ideal mix of aid to seniors while not overburdening younger property-tax payers,” he wrote.

A typical program will fix the tax rate of a residential property once a homeowner reaches a certain age, usually 61 or older. Another method allows seniors the option to place their current property taxes as a lien against their home, effectively postponing the payment of taxes until the sale of the home or their death.

Critics argue that such relief programs privilege the elderly at the expense of younger taxpayers and deprive the community of needed tax revenues. Moreover, senior tax breaks disproportionately benefit non-minority Americans.

“White Americans are more likely to own a home than nonwhites,” the article noted. “For the elderly, this gap is even more pronounced, as older white Americans are 12 percent more likely to own their home than older African Americans, and 19 percent more likely to own their home than older Hispanics.”

But more than balancing out these costs are the benefits of helping the elderly retain their homes, especially in communities where rapidly escalating property-tax assessments place a huge burden on owners whose incomes are fixed or dropping.

Meyer cites “a large body of research literature” that finds a positive connection between homeownership and the physical and social well-being of senior Americans.
Relocation to new communities or nursing homes “can create intense distress for older adults who are forced to leave their longtime homes,” he concluded.

At the same time, elderly homeowners do not require the same high cost of services as younger homeowners, especially those with school-age children. “The amount a family with one or more children pays in school taxes does not come close to matching the amount it costs a community to educate even one child.” School districts actually benefit by retaining elderly homeowners because the savings in education costs more than offsets any tax relief granted to senior homeowners.

Meyer’s article is titled “The Hidden Benefits of Property Tax Relief for the Elderly.”