Property Tax and the Louisiana Homestead Exemption
If you believe that, as I do, you recognize that funding is one-third of the foundation for a successful public school system.

Most people, I suspect, will acknowlege that; unfortunately, it is often grudgingly accepted.

In New Orleans, as elsewhere, public schools receive funding from several sources, the most important are State Grants/Payments, Property Taxes, and Sales Taxes. As elsewhere, those same funding sources support other governmental functions.

Although the genesis of this web site is the public school system, the questions I pose, below, are applicable to any property tax system for funding public functions, which includes a homestead exemption for homeowners. (The homestead exemption, in Louisiana, is rooted in the Louisiana Constitution - excerpts from that Constitution are available which include such issues as the homestead exemption, property taxes, and school funding)

All people, regardless of their stand on the homestead exemption, would agree that any tax system must be fair. What that means, in practice, is not agreed on.

Consider these issues:

  • The property tax system is paid, ultimately, not by owners of the property, but by the users. For owners, that cost is directly paid by them; for renters/leasees, the cost is passed thru as part of rent/lease payments.
    • Consider two identical families [similar incomes, number of children number of employeed adults] living in identical properties. Those renting property pay more property tax than owners. What is the interest of the taxing authority to make renting property more expensive? These families would be relying on, and using, publically funded services identically. Yet, the property owner pays less for the same services. Is this fair?
  • Some suggest that removing the homestead exemption would unfairly hurt the poor.
    • Yet, the poor, generally, do not own property, they rent. Therefore, they pay property taxes without the benefit of the homestead exemption. If there is an interest in protecting poor and elderly homeowners who can not afford the property tax in full, would it not make sense to create a system which targets that concern, directly? Perhaps, defer tax payments equal to the "homestead exemption" until a sale or transfer of the property; protect inheritances to impoverished, residing family members by a similar deferrment.
    • The Louisiana constitution provides [as of Jan 1, 2000] a special exemption to the elderly earning less than $50,000. (See excerpt) This is not a deferral of taxes, rather a prohibition against increases in the assessment.
      • Liquidity and net assets are not relevent. Should they be?
Not easy questions.

The entire public discussion of support for the homestead exemption has been rendered to its least common denominator. The defense of the homestead exemption is an issue governed by the defense of voters' pocketbooks, a political stand well received because homeowers tend to vote more regularly.

Unfortunately, issues about tax fairness, and the necessity of funding public projects and services, do not gather sufficient interest.

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John Ruskin
New Orleans
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     New Orleans, Louisiana 70118
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