I’ve commented before on the conclusion, by several analysts, that due to means-tested assistance many people of low an moderate income can face marginal tax rates approaching or even exceeding 100%. That is, if you accept a raise, you might lose some of your food stamps, or medical assistance, or subsidized housing, or federal and/or state earned income tax credits, or other benefits “targeted” for low-income people.
Last week Cook County Assessor James M. Houlihan was kind enough to tell me about another means-tested benefit, that apparently has put some people into a marginal tax bracket of 2,000% or more. And they didn’t even know it, because tho just announced, it’s based on 2006 income.
He calls it the “Long-time Occupant Homeowner Exemption,” and it only applies to “homeowners residing in their homes 10 years or more.”
- If total household income for 2006 doesn’t exceed $75,000, the increase [in assessed valuation for the homeowner’s residence, apparently] will be limited to 7%.
- If total household income for 2006 doesn’t exceed $100,000, the increase will be limited to 10%
In both cases there is no maximum exemption amount.
Somewhere there is a longtime homeowner, whose 2006 income was, say, $100,005. That extra $5 might now cost her hundreds (or thousands?) of dollars in real estate taxes.
The impossibility of intelligent tax planning is far from the only reason this is a dumb idea, of course. The savings these longtime homeowners receive will be made up by the rest of us– including the first-time recent buyer struggling to cover an adjusting mortgage.
But I don’t mean to blame Assessor Houlihan exclusively for this nonsense. He says, and I’m sure it’s true, that it is established by the Illinois Legislature. And furthermore, he seens toi be embarrassed enough by it that it’s not on his web site at http://www.cookcountyassessor.com (or at least I couldn’t find it there). There is some mention of it at the City of Berwyn site.