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"McMansion" Tax
Daily Policy Digest

State & Local Issues / State and Local Taxes

Friday, October 10, 2003
Class warfare is alive and well in Massachusetts. And taxpayers and the economy will be the worse off for it, says the Boston Herald.

Battles over instituting a graduated income tax have come and gone over the years. Voters always saw through the rhetoric and understood the basic unfairness of such an approach.

Now, community by community, some lawmakers are intent on imposing, or exacerbating, what amounts to a graduated property tax - with "rich" homeowners' property taxes going up, while others' go down.

  • The Massachusetts Legislature voted Wednesday to override Gov. Mitt Romney's veto of a Cambridge plan to transfer more of the property tax burden there to owners of higher valued property.
  • On Nantucket officials are eyeing a "McMansion" tax with funds raised to be used to support affordable housing.
These "soak the rich" approaches, of course, have a major flaw, explains the Herald. The value of one's home can have little bearing on ability to pay more taxes. Low-income elderly homeowners might not have a mortgage, for instance, while the owners of a higher priced home might be mortgaged to the hilt and be paying college tuition, argues Barbara Anderson, executive director of Citizens for Limited Taxation.

The law of unintended consequences comes into play, too:

  • Supporters of the Cambridge plan say it will help residents, who would otherwise be squeezed out of their own communities, afford to stay by easing the tax burden.
  • But renters, low man on the totem pole of the affordable housing debate, will see rents increased by owner-landlords hit with a tax hike.
These plans "pit property owners against each other," CLT's Anderson says.

Source: Editorial, "Soak the rich plan still a losing tactic," Boston Herald, October 10, 2003.

For text
http://www2.bostonherald.com/news/opinion/edt110102003.htm

For more on State and Local Taxes
http://www.ncpa.org/iss/sta/

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