The Honorable Evan Bayh
United States Senate
Washington, DC 20510
Dear Senator Bayh:
On behalf of the 362,000-member National Taxpayers Union (NTU), I write to endorse the Homeowner Tax Fairness Act of 2007 (S. 2068). Your bill would create a new federal individual income tax deduction for state and local property taxes that would be available to non-itemizing taxpayers.
As you know, the seemingly perennial problem of rising property tax burdens has become intolerable for millions of homeowners and financially untenable for some. During the last fiscal year, states and localities extracted nearly $392 billion in property taxes from Americans, more by far than they collected from either personal income or general sales taxes.
The Census Bureau reports that in the past five years alone, state and local property tax receipts jumped 39 percent. Even during the slowdown of 2001 and 2002, when income tax revenues were plummeting and sales tax receipts were flat, property tax collections continued their inexorable rise. This seems to be the case today as home values decline and overall economic conditions appear less robust.
Although state and local officials insist that the pinch of property taxes will soon ease as reassessments "catch up" with the softening housing market, this is of no comfort to homeowners who are suffering now and who don't plan on using the 1040 "long form." Moreover, citizens do not always have the recourse they deserve through the political process (such as lobbying for tax relief or voting for binding ballot measures that limit taxes) to effect change when it is not forthcoming.
As roughly two dozen states appear to be headed toward budget deficits for fiscal year 2009, and localities brace for possible reductions in state aid, the spending spiral will continue to exert pressure on taxpayers' wallets. It is within this environment that S. 2068 could provide savings to middle-class taxpayers who normally file the 1040A form. Combined with measures such as the Mortgage Forgiveness Debt Relief Act of 2007, your legislation could help homeowners through some financially trying times, without resorting to costly taxpayer-funded mortgage bailout schemes or taxpayer-backed expansions of agency-debt portfolios.
Regrettably, irresponsible tax policies concocted outside of Washington, DC have once again necessitated a federal response in the form of a tax deduction. But until citizens can put reasonable limits on property taxes, and until Congress replaces the Tax Code with a fairer, simpler alternative, your bill is a perfectly rational response to a serious affliction plaguing taxpayers.
NTU supports the Homeowner Tax Fairness Act as a means of protecting taxpayers from escalating property tax burdens. We look forward to working with you to enact this legislation.
Sincerely,
Pete Sepp
Vice President for Policy and Communications