In The News › The true cost of ‘tax free:’ Raising the homestead exemption would be too costly for Louisianians

Mar 25, 2009

Source: Times Picayune

Filed under: Statewide, Taxation & Assessments

The true cost of ‘tax free:’ Raising the homestead exemption would be too costly for Louisianians

The true cost of ‘tax free:’ Raising the homestead exemption would be too costly for Louisianians
Posted by The Times-Picayune editorial page staff March 25, 2009 3:34AM

Everyone wants a free lunch — but everyone also should know such a thing does not exist.

There are always people willing to sell snake oil, however, and a host of Louisiana politicians are at it again — pushing to raise the already generous homestead exemption.

The exemption already shelters the first $75,000 of an owner-occupied home from property taxes. Proponents of the increase argue that’s not enough and want to raise the exemption to as much as $160,000.

According to the Bureau of Governmental Research, however, 245,000 homes in Orleans, Jefferson, St. Tammany and St. Bernard parishes are eligible for the homestead exemption, and about 63,000 of those already are fully covered by the provision — meaning those homeowners are exempt from almost all property taxes.

If the homestead exemption is set at $160,000, the number of fully tax-exempt homes in those four parishes would grow to 165,000, or 67 percent of owner-occupied homes.

That would wipe out hundreds of millions in tax revenue that pay for services like schools, drainage and infrastructure repairs. Local governments could be forced to severely cut services. Proponents of the homestead exemption increase never ask homeowners whether they would like to do without drainage or paved streets, but that should be part of the debate.

The alternative to service cuts would be huge tax increases on renters and businesses. According to BGR, taxes on rental and commercial property would have to go up 8 percent on the east bank of Orleans Parish, 17 percent in Metairie and a whopping 34 percent in large parts of unincorporated St. Tammany Parish.

Businesses already carry the heaviest tax load in most parishes — in Jefferson Parish, for example, homeowners’ share of property taxes was only 24 percent in 2008.

Raising the homestead exemption would make it much harder to open or maintain a business in our state, and that would cost Louisiana jobs at a time when we can ill afford it. Individual residents and the state as a whole would suffer.

Officials pushing to raise the homestead exemption focus their sales pitch only on the immediate — albeit short-sighted — benefits for homeowners. The politicians have other motives, however. In a state with a populist tradition that dates back to Huey Long, raising the homestead exemption is as popular an idea as was Mr. Long’s credo to make “every man a king.”

But just as Mr. Long was being a demagogue with his unsustainable promises then, so are those who want to more than double the homestead exemption.

This myopic idea may appeal to homeowners in the middle of a recession. But for the good of everyone in the state, the Legislature and Gov. Bobby Jindal should reject it.

Mar 25, 2009

Source: Times Picayune

Filed under: Statewide, Taxation & Assessments

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