Public Notice: I Say Regressive; You Say Progressive

Wherein Hizzoner gets to rebut my last column

Public Notice: I Say Regressive; You Say Progressive

I spent much of last week's column blasting the proposed doubling of the city homestead exemption as a "hugely regressive" policy under which "by far the biggest share of the benefit goes to the wealthiest people, in the most expensive homes." As expected, City Council passed the exemption hike (unanimously), and the following day, Mayor Steve Adler, who had been one of the more stalwart proponents of the move, sent me a very nice and very detailed note explaining his vote and challenging my characterization of it being "regressive." So in the interest of fairness, I thought I'd lay out that side this week.

Essentially, when you look at it in terms of a percentage of income, "A 20% general homestead exemption saves a lower income person .082% of their income and a higher income person about half of that, or only .047% of their income. The exemption is mildly progressive." But also: "For me, the bigger benefit is in the tax shift ... from homestead property to commercial/industrial." (That is, lower residential taxes will be made up in higher taxes on non­-homestead properties.) That includes rental housing, but, he goes on, studies have shown that in housing markets such as Austin where supply is constrained, "an increase in property taxes really is not the driver of rents.

"On balance then, my equation was that an increase in the general property tax exemption would 'mildly' favor lower income homeowners so would be mildly progressive. Importantly, there would be a tax shift that would fall on more affluent owners of non­-residential commercial/industrial properties (and business owners) as opposed to workers. And, finally, that the additional property tax shifted to non-homestead residential ... would not really be passed through to tenants (in Austin's real estate market)."

Fair enough, and I do appreciate the context, and your reasoned vote, and the attached research, but on the other hand the regressive/progressive scale is a continuum. Of all the things the city charges money for, or spends money on, not a single one is indexed to income. If you go to a pool, turn on a light, pay a parking ticket or sales tax on your lunch – everyone pays the same, and the poor person pays a hugely larger percentage of their income on it than the rich person. That's regressive. There's one exception where the rich person pays more – at least in real dollars, if not in percentage of income – and that's property taxes. They may not be progressive, but they're the least regressive tool in the city's fiscal tool box.


"Rogers-Washington-Holy Cross: Black Heri­tage, Living History" is Preservation Austin's 2021 Virtual Homes Tour, celebrating Austin's first historic district honoring Black heritage, including the homes of Tuskegee Airman Norman Scales, former Huston-Til­lot­son President Dr. John Quill Taylor King, Ira Poole "and his iconic collection of yard art Americana," and more. It's a video tour event, premiering Thursday, June 17, at 7pm; $20 for PA members, and $25 for nonmembers. See preservationaustin.org for full info on the effort to diversify the history that gets preserved.

Send gossip, dirt, innuendo, rumors, and other useful grist to nbarbaro@austinchronicle.com.

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KEYWORDS FOR THIS STORY

homestead exemption, Steve Adler

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