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Young or Old, Disabled or Not, No Reason for Tax Breaks

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By Lowell L. Kalapa

This could be a lot more controversial than it really is, but the arguments need to be put out there about when tax relief should be given or afforded.
Let’s start with the very term tax relief. It does not mean that someone or some company should pay less taxes just because one believes that someone else should be paying those taxes. What tax relief means is just that, that the burden placed on a person or thing, such as a transaction, presents a difficulty for the taxpayer. It means that the burden is more than the taxpayer can or is able to pay and still be able to survive.
So after nearly 30 years lawmakers finally had to admit in 1998 that the state income tax had come to represent an enormous burden on residents. The income tax rates and brackets had not been adjusted since 1965. During that period inflation had pushed most taxpayers into the top income tax bracket which is generally reserved for the most well-to-do income earners.
And while income tax rates will drop over the next two years, experts believe that the top rate still needs to be reduced to be on par with where the top rate was in 1965 given the effects of inflation. But that prospect remains rather dim as the state continues to struggle with its financial woes.
But looking beyond that, it is fascinating to review some of the other types of tax relief that have been adopted over the years. For example, under the property tax, the homeowner exemption is granted to those people who own their shelter or place where they live. There is no rhyme or reason why homeowners get a tax break and renters don’t. Actually the homeowner exemption dates from the 1930’s during the height of the Great Depression when cities and towns wanted to encourage home ownership as opposed to housing transients.
There is no indication that owning a home makes that taxpayer less capable of paying the property tax burden than a renter. In fact, the opposite might be true. Yet this situation is exacerbated by the fact that as the homeowner gets older, the amount of the home exemption is doubled and nearly tripled depending on how old the homeowner is. Again, the law or perhaps it is lawmakers who presume that aging makes the taxpayer less capable of paying their fare share of taxes.
This theory carries over to the income tax law at both the federal and state level where those over age 65 get multiple personal exemptions and in some cases, depending on age, larger standard deductions. While questioning these tax relief mechanisms may not be politically correct or popular, the issue begs contemplation.
If tax relief is supposed to alleviate a burden of taxes which cannot be borne by a particular taxpayer because the taxpayer does not have the means to carry that burden, then the tax relief mechanism should measure that taxpayer’s ability to pay the burden.
Similarly, the income and general excise tax laws extend tax relief to the disabled, again based solely on the person’s physical disability. No mention is made of any qualifying criteria that measures the person’s income. Thus, the owner of a multimillion dollar business who qualified as a disabled taxpayer would get the same tax relief as a disabled person selling pencils on the corner for a living.
A letter to the editor pointed out another anachronism in relief for the disabled. As the writer noted, while disabled parking stalls seem quite appropriate as they are usually located closer to the store or doors of stores, there is absolutely no reason why the disabled should be excused from feeding the parking meters. Again, the question of “ability to pay” raises its ugly head.
Now don’t think that there shouldn’t be some kind of tax relief for the poor, those people who truly cannot afford to carry their share of either the state, county, or federal tax burden. Such tax relief should be extended to those who are truly poor. And there are mechanisms that help determine whether or not taxpayers can afford to pay that tax burden.
For example, the circuit breaker measures the taxpayer’s ability to pay the real property tax burden, ensuring that the real property tax burden doesn’t represent more than 3% to 5% of the household’s income. The former “general excise” tax credit refunded poorer taxpayers what was perceived as the amount they paid in the 4% general excise tax on their purchases of food and other essentials. Again, the relief was based on the taxpayer’s income or ability to pay and not on age or disability.

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