Shelve tax deferral plan
What problem, precisely, would this legislative proposal fix? It's true that some seniors are pinched to pay higher property taxes, but it is urban legend that occupied homes are sold for unpaid taxes in Utah. It doesn't happen. Beyond that, there are a number of mechanisms in existing law to assist people who are eligible for tax relief. There are tax abatements available to people 65 and older, people with disabilities or those who can demonstrate other extreme hardship, regardless of age. The amounts of these abatements are determined by household incomes. There are also tax exemptions for disabled veterans and the blind.
Moreover, why extend this benefit at age 65, regardless of income? Many people work past age 65 and have sufficient means to pay their property tax and any increases. According to census estimates, more than 206,325 Utahns are 65 and older. Add to that the first wave of the baby boomers who will soon retire. If they have sufficient incomes, why should their age determine when they get a break on tax increases?
In some respects, a deferred property tax becomes an estate tax. Although seniors who own property would not have to pay for tax increases above the base rate for the remainder of their lives or until the property is sold, their heirs would have to pay the back taxes plus 6 percent interest or the federal fund rate (whichever was lower), if the property is conveyed to them. If a mortgage has not been retired or there are outstanding loans against the value of a home, heirs could end up owing more than the property is worth.
Utah law has a number of mechanisms to assist people who qualify for property tax relief. While it is arguably difficult for people on fixed incomes to budget for every new property tax increase, there is no compelling rationale to create a property tax deferral system.
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