Tax-cut plan for seniors raises fears

Article Courtesy of The Miami Herald


Published October 16, 2007

As legislators proceed with a new property tax-cut plan, they consider possible effects of a plan to exempt low-income seniors from paying taxes.

TALLAHASSEE -- A well-intentioned plan to give poor seniors a break has state legislators worried that wealthier people could ''game the system'' so they can avoid paying property taxes on their homesteads.

What's more, unlike other major items in the constitutional amendment package that legislators could approve this week for voters' consideration Jan. 29, the break for about 415,000 qualifying seniors could take a big chunk of money from schools -- between $400 million and $600 million statewide yearly.

The plan would affect Broward, Miami-Dade and Palm Beach counties most, because South Florida has the largest number of seniors in the state. The proposal would allow people over 65 with a gross household income of less than $24,000 a year to avoid paying any homestead property taxes.

Some legislators fret that the program would encourage seniors to shield their assets and that it would attract more elderly permanent residents to the state.

''I'm not sure it's the best policy to turn Florida into more of a retirement community,'' said Lakeland Republican Sen. Paula Dockery. ``Seniors need help, but I'm not sure this is the best thing at this time.''

The proposed break has no test for people's assets. Nor does it prevent people from giving money to relatives to appear poorer on paper or parking significant savings in low-interest accounts to ensure their incomes remain low to avoid paying taxes.

Senate Democratic leader Steve Geller of Cooper City said he didn't want to mirror problems experienced under Medicaid, in which middle-class and even wealthier people can qualify for the low-income program by divesting their assets -- a ''millionaires on Medicaid'' phenomenon Republicans have groused about.

''I want to limit this to poor seniors, not seniors smart enough to figure out how to avoid paying taxes on a million-dollar home,'' Geller said.


And though a current senior break exists, Geller pointed out this proposal promises a complete tax break and therefore would be more enticing for those seeking to ''game the system.'' He also complained the numbers aren't clear and that lawmakers are rushing the proposed constitutional amendment package during this special lawmaking session so voters can decide the matter on Jan. 29.

Sen. Nan Rich, a Sunrise Democrat, said the tax plan rewards homesteaders, who haven't been hit by unaffordable taxes like businesses, while the break for seniors ''pits'' the elderly against school kids.

Rich said cutting school property tax money would probably lead legislators to cut the state healthcare budget, which would hurt seniors. ''We're just redistributing wealth with this,'' she said. ``I'm not sure if this helps or hurts.''

The concerns Monday about the lack of data and clear numbers in the tax-cut proposal weren't limited to the break for seniors. House and Senate committees raised dozens of questions about the entire package, though the House panel unanimously approved three pieces of tax-cut legislation anyway.


The fast-track approval prompted members from both parties to urge legislative leaders to slow down. They want to avoid mistakes made during the last special session on property taxes, when they mistakenly gave the city of Miami a lower tax rollback rate than it was entitled to and crafted flawed language that prompted a judge to throw a previous tax-cut proposal off the Jan. 29 ballot. ''I'd hate to be on a fast pace with a lot of questions hanging out there,'' said Rep. Julio Robaina, a Miami Republican.

``We need to make sure that we study all of this and don't make mistakes two times in a row.''

House Democratic Leader Dan Gelber told House Speaker Marco Rubio in a letter Monday that his members are willing to take the time to avoid rushing the measure. ''Given the importance of the task at hand, doing it right is more important than doing it fast,'' Gelber said.

Rep. Dean Cannon, the Winter Park Republican who leads the House negotiations on property taxes, said he didn't find ''a compelling argument'' to delay the plan to vote on the bill by Thursday.

At the House Government Efficiency and Accountability Council, legislators came loaded with questions about the tax-cut package -- amounting to $11 billion over five years.


They asked what the cuts would mean to local government services, particularly police and fire departments, how fair the proposed change will be to the property appraisal process, and what effect a tax break for new home buyers would have on divorced couples.

House and Senate leaders didn't have all the answers. They said this much is known: The cut to local governments in Miami-Dade County would be at least $229 million in the first year, $231 million for Broward. Homeowners would see their property taxes drop on average $240 the first year.