Joseph Delaney

It sounds good, but it doesn't work. 1. There are ongoing costs to providing local services that don't terminate because the owners are 65+. 2. If a state did this, and seniors flocked there, having never previously paid into the system -- never paid property taxes to the locality, little or no income tax liability to the state, really just sales and excise tax liability going forward -- how will that be sustainable? 3. It discriminates against renters and distorts preferences. If seniors don't pay property taxes on owner-occupied homes, they're strongly incentivized to own single-family dwellings, not to rent, or to live in lease-based seniors or assisted living communities, etc., even if this would otherwise be their preference. 4. It "unprices" government spending and community amenities which benefit seniors directly (local services they use) or indirectly (e.g., school systems that make the community more desirable). 5. Depending on its design, it may create tax avoidance opportunities like transferring title to an elderly family member while otherwise tax-eligible people continue to live in the home. This can be ameliorated somewhat by at least requiring that it is the senior's primary residence, but is still likely to prove an issue. 6. It shifts tax burdens onto newer and younger would-be homeowners. 7. In that respect, it's an unjustified intergenerational transfer. Some seniors are low- and fixed-income, and there are existing features of many states' property tax systems to help ensure that they are not priced out of their homes. But many seniors have far more assets than those just starting out, and don't need to be subsidized by younger families. 8. More broadly, it makes home ownership harder and more costly for younger and newer homeowners, which is bad in its own right, but also a problem because those currently in the labor force are already the primary taxpayers, and in this case almost the exclusive taxpayers. Expected property taxes are partially (arguably mostly) "capitalized" into the price of a property. If older would-be owners who will soon age out of the tax system, or have done so already, are competing with those who still have to pay (in fact, likely have to pay more to subsidize this), their existing wealth coupled with their far lower cost of ownership will lead to equilibrium prices that keep housing away from newer/younger buyers. It makes new construction more costly (it bears more tax burden) and reduces turnover of existing stock and thus restricts housing supply. Property taxes are rising too quickly, and there are smart reforms (like levy limits plus circuit breakers and deferral options) which both restrain the overall growth of tax burdens and protect low-income seniors. But a blanket exemption is not the way to go.