Supervisors have tried for years to improve the county’s system of real estate tax relief for elderly and disabled people, but have so far been unable to agree to a solution. Now, the county board is moving forward with its latest attempt.
They have worried for years that the way the county provides that tax relief now is unfair, because it weighs a person’s net worth. To qualify for tax relief, a person must be 65 years or older or permanently disabled; their gross household income, not including disability payments or a part of their spouse’s income, must not be more than $72,000; and except for their house, a person and their spouse’s net worth cannot exceed $440,000.
A person who meets those criteria are eligible for a pass on their real estate tax.
But supervisors worry that works against people who have saved for retirement. A person’s retirement savings could disqualify them, while a person with more monthly income and a pension would still qualify.
The newest proposal, this time prepared by county staff, expands upon the existing program. It sets up four more brackets for tax relief, each getting 50 percent relief, based on a sliding scale of income versus net worth.
Taxpayers would be eligible to pay half as much on their real estate tax bill if they earn up to $65,000 with $560,000 net worth; $59,000 with $680,000 net worth; $52,000 with $800,000 net worth; or $46,000 with $920,000 net worth.
That scale is based on the total income a household would get if they converted all of their net worth into an annuity, bringing in $5,400 annually per $100,000 invested. And it was meant to be a simpler solution to a complex problem.
“As you try to make the program more equitable, more fair, in more ways, you also invariably make it more complicated and difficult to administer and for the public to understand,” said Doug Kinney, an economist with the county Department of Management and Budget. He said this model is a commonly used device in measuring a household’s financial status.
Based on limited data, county staff have estimated the county could forfeit $1.2 million to $2.7 million in tax revenue, on top of the $8.3 million in real estate tax the program already forgives.
Like all previous plans, supervisors viewed this one as an imperfect improvement.
“I wish it wasn’t 100 percent or 50 percent,” said Supervisor Ron A. Meyer Jr. (R-Broad Run). “I still think if you live here and own, you should be paying some level of taxes, even if you get 75 percent relief. But this is the cards that this board’s been dealt from the last board, so I think this is an improvement.”
And Supervisor Geary M. Higgins (R-Catoctin) said it leaves out some people.
“If I have a farm that’s worth a million bucks, that I’m busting my chops on to earn $72,000… that farm throws me out of this tax relief, because that basically is my way of earning income,” Higgins said.
But only Supervisor Matthew F. Letourneau (R-Dulles) outright opposed the idea, which he said expands the tax relief system instead of fixing it.
“I think all we’ve done is expand the program, and this is income redistribution,” Letourneau said. “This is just massive income redistribution, where everybody else in the county now will be paying more—$11 million total for the program, that’s over a cent in our tax rate now—that everyone else will be paying because we’re now giving a subsidy to other people.”
County staff have recommended phasing the program in, since data on its impacts are limited, to avoid any unexpected shock to county revenues. Supervisor Ralph M. Buona (R-Ashburn), who along with Supervisor Suzanne M. Volpe (R-Algonkian) has pushed for tax relief for the elderly and disabled since the previous board, said the new tax relief plan is about “fairness” and is “the right thing to do.”
“The impact isn’t that large, the number of people isn’t that large,” Buona said. “This isn’t wealth redistribution. This is helping out elderly people and disabled people, correcting an inequity.”
Supervisors voted 8-1, Letourneau opposed, to draft a revision to the county tax code and hold a public hearing, which is not yet scheduled.