Gubernatorial candidate Ron Sims is now running a TV ad touting his tax increase package, which he claims will "cut taxes for 78% of Washington's families". Elizabeth M. Gillespie of the Associated Press is correct to call Sims on the crucial details he leaves out of his commercial: "Sims ad touts tax relief _ without mentioning income tax". But Gillespie is also wrong on some essentials:
Also missing from the ad: Sims' proposal to give most homeowners a $100,000 tax credit, touting it as a huge help to people on fixed incomes who struggle to pay their tax bills as their property values rise. Those tax cuts would be offset by a 4 percent to 5 percent property tax hike on homes worth more than $600,000.No. It's much worse than that.
What Sims' tax plan does is to increase the state property tax levy by 20%, subject to a $100,000 homeowner exemption. The point at which the current tax is equal to the proposed tax is $600,000. It's possible that in somebody's estimates all property worth $600,000 and more would, in the aggregate, pay about 5% more tax. But individual properties could pay a lot more than 5% more. For example, a $1 million home would pay an 8% increase. Given that the proposal doesn't seem to include any indexing to real estate price inflation, a lot of unsuspecting middle-class homeowners would eventually find their homes reassessed at values that would turn the Sims tax plan into a really bad deal. It's also the case that renters and commercial property owners would immediately be hit with a 20% increase in their effective state property tax.Posted by Stefan Sharkansky at August 17, 2004 04:37 PM | Email This