The property has to be worth $684,000?! How does this help anyone in the income brackets he gave, they can’t afford a house that expensive?
A mortgage on a house that is worth $684,000 would be
$4,100/month at 6% interest. That would be $49,000 a year. How would someone who makes $46K, $58K or even $70K afford that kind of mortgage? Even if you assume they had some how put 20% down on that house, which is still about $3,300 a month, $39,600 a year. Still unaffordable.
This tax circuit breaker is only going to help the very small percentage of Mass residence who were fortunate enough to have either purchased at the right time or have a house left to them by a relative. I have a hard time justifying the help for those people while many others are in far worse situations. After all, if things were that bad they could cash in on the equity in the house and buy something that would cost them less on a monthly basis.
The Patrick administration estimates this will cost about $75 million. Based on a total saving of $870 per house hold, that is less then a 100,000 people it will be helping. Sure some people will get less then the full amount and the amount of people may go up. But even if you assume an average saving of half the credit, that is still only about 160,000 people.
If this is representative of the great plan that he has for the state, we’re in trouble.
Patrick seems to be completely out of touch with reality. Between this tax break that is not going to help people who are truly in need, the Caddy, the drapes, the helicopter ride and reverting to paper budgets, and all in under two months.
I will give him some credit for closing corporate loop holes. Taxes should not be set up so that the people who are smarter or can afford to pay smart people to do their taxes pay less. Although there is some legitimate criticism in doing this now and how it could affect the economy of the Commonwealth. However, he does appear to be a bit hypocritical on this….
“They’re gaps; they’re cracks in our existing tax structure that clever accountants and lawyers — and I used to employ them when I was in business — use to aggressively avoid paying their fair share,”
So it was OK for him to avoid taxes but let’s stop that practice now that it doesn’t affect him?
I’ve been kind of frazzled lately, so forgive me if my reading comprehension is not what it once was, but doesn’t “no more than $684,000” mean that the property must be worth less than $684k for the owner to qualify? This seems to be the opposite of what you are saying.
That’s what happens when you drink and blog. You get all bent out of shape over nothing.
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No more scotches at lunch for me.
I admire the ability to admit one is wrong. Good for you.
Brilliant, brilliant.
Take your anti-Deval glasses off for a minute and reread the proposal. The break goes to people who live in houses less than $684,000. This is simply an extension of the existing senior circuit breaker law to anyone, removing the renter portion of that law.
Yes, sco, you are correct. The quote cited above says the property has to be worth NO MORE THAN $684K. Which means it has to be LESS THAN $684K. Only people in homes worth LESS THAN $684K could potentially qualify.
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I await a new, corrected post, “Deval is not out of step with reality, but I need to read more carefully before making accusations.”
and I shall leave the post up through the weekend for all to see my drunken shame.
…that may justify some of JK’s fears.
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I live on Cape Cod, land of obscenely valuable inherited houses. A $600,000 house is not that uncommon. What is ALSO not uncommon are people – especially widows of stockbrokers and insurance agents – who have ‘earned income’ of $11,000 while sitting on a life insurance payout of $2 million. While most of them will collect under the Senior Circuit Breaker, there is no reason with a little juggling why people of all ages cannot have trust funds, etc. Is that $70k EARNED income, or income from all sources?
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People with lots of money know how to structure their income. People with a FAIR amount of money know as well. The people this is presumably aimed at, the family of five in Framingham, might find that while their property tax bill is very bad, it doesn’t exced 10% of joint income. While the widder woman serenely takes more cash out of the passbook savings to pay her now 75% bill.
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Why is there no means testing attached to this if it is being expanded to all age brackets (the rationale behind the SENIOR circuit breaker is that most people in their 80’s can’t exactly rush out and get a second job.)
I don’t think there is widespread concern for those with multi-million dollar homes. There are some options to those people. The ones who do not have options is what is being focused on here. I hope you agree.
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Plus, JK. Good stuff …
a) 80 year old widow. Owns a nice $500,000 home at the Cape and the taxes are around $7000 per year. Social security is $14K per year and her pension is about $20K.
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She has $250,000 in tax free bonds with a yield of 4%.
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Should she benefit from the Circuit Breaker (i.e. pay less in income tax because of her economic status.)?
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b) Another:
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50 year old guy owns his own business in an 100% owned corporation. Takes $40K salary and leaves the rest in the business. Has a $600,000 home in central massachusetts and the taxes are also about $5K. Circuit Breaker?
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c) Another:
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Family in Long Island sells home for a cool million and moves to massachusetts. Invests in a “smaller” home for $400K and banks the remaining $600K. Takes off a year to see the world and travel while living off his savings and earnings thereon. Circuit breaker?
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d) Last one:
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Family of 4 with a stay at home mom and one bread winner has a house worth $250,000 with taxes of $4K. Husband earns $69,000. Circuit breaker?
JohnK – I am not expressing concern about those with other resources; I AM expressing concern that based on past performance, MANY people will qualify for a circuit breaker who were not part of the original intention to benefit those with limited resources.
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Since this is being expanded to the general population – wouldn’t THIS be the right time to add asset testing to the current income testing?
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Remember, once you have created an entitlement, you can’t take it back again (well, perhaps you can, but not easily and even modifying an entitlement blows through a lot of political capital – jsut ask the authors of the infamous Sec. 139, which changed the criteria for Mediaid to pay for nursing homes!)