Homestead Tax Exemption

It’s school tax season, and I received our four annual tax bills from the school. Earlier I wrote about why WSSD’s poll tax is a bad idea (WSSD calls it a per capita tax). This year its the homestead exemption’s turn. In this year’s budget, WSSD highlighted the increase in the homestead exemption to offset some of the tax increase. A friend pointed out that not every tax payer benefits from this.

First though, what is the homestead exemption? A constitutional amendment was passed to allow for this exemption,

(vi) Authorize local taxing authorities to exclude from taxation an amount based on the assessed value of homestead property. The exclusions authorized by this clause shall not exceed 100% of the assessed value of each homestead property within a local taxing jurisdiction. A local taxing authority may not increase the millage rate of its tax on real property to pay for these exclusions.

Penn State Extension has a fantastic explainer about this exemption. Essentially, any homeowner living in a school district that allows this exemption can apply for the exemption on their primary residence. This effectively lowers the appraised value of their property for tax purposes. This year in Nether Providence, the exemption is $16,279, which results in an effective tax reduction of $454.20. This appears on your tax bill. In the picture are the relevant sections of my tax bill for our two lots. The one on the right with the exemption is for the lot our house is on and the one on the left is our adjacent garden lot which gets no exemption.

You can find out more information on the county’s homestead exemption page as well as a link that will confirm the exemption status of your property. If your house is not receiving the exemption (and its your primary residence), the page has instructions with the form you need to fill out and where to send it to the school district.

Why is this exemption a bad idea? Who doesn’t want lower taxes? Well, not every resident is a homeowner. Most notably, renters are not eligible for this tax reduction. The owners of these properties are not the primary residents, and they pass the higher tax rate for their properties on to their tenants. While the tax exemption is flat (providing the same benefit to someone owning a $200,000 home as a $1,000,000 one) it does not benefit the members of our community that are likely to have the lowest incomes and wealth – renters. As noted in a recent article, the racial gap between white and black homeowners is the largest in 120 years. Since renters pay higher taxes than homeowners under this policy and black Americans are more likely to be renters, effectively, this results in the black members of our community being more likely to pay higher taxes.

This is an example of how structural racism works. While the homestead exemption says nothing about race, its benefits primary go to wealthier, whiter homeowners in WSSD while lower income black renters are left paying the higher rates. Next year, the school board could decide to not increase the racial disparity and instead ditch the poll tax. By lowering the homestead exemption instead of raising it, the school district could offset the cost of eliminating the poll tax, saving on paperwork, administrative costs, and taxpayer frustrations while creating a tax system that is more equitable and less regressive.

Categories: Government, WSSD