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Median
Income
Option Introduction
Rationale
for
Establishing
the Median
Income Option
Methodology
and Formula
for Computing
the Median
Income Option
Analysis
of Widely
Held Assumptions
about Nonresident
Taxpayers
Perspectives
Index
Perspectives
on Education
Issues
When School
Expenses Rise,
by Allen Larson
Perspectives
on Housing
Issues
ANALYSIS OF
WIDELY HELD ASSUMPTIONS
ABOUT NONRESIDENT TAXPAYERS
There are two main assumptions made about coastal regions like Cape Cod, which are the biggest reasons why these towns have been shortchanged by the current property values–based Chapter 70 formula:
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Coastal regions are loaded with nonresident taxpayers. The assumption is that these towns are laden with vacation homes whose owners pay property taxes to the host community, yet do not overburden local services like police, fire, and schools. This presupposes that these vacation homes are not rented out to families who live in them year-round and use town services, particularly schools.
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Only coastal regions have nonresident taxpayers. The assumption here is that all other communities have few if any nonresident taxpayers. This presupposes that there are few if any “snowbirds” who summer in Massachusetts, winter in Florida or other warmer climes, and take advantage of out-of-state tax and estate laws.
These assumptions are strongly held on Beacon Hill, yet there are no data to back them up.
Consider the following:
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Neither the state Division of Local Services nor individual towns track the number of nonresident taxpayers in the Commonwealth.
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There are 11 communities in Massachusetts that have adopted the “residential exemption” property tax system, which seeks to shift some of the tax burden to nonresident or commercial taxpayers or renters. However, even these towns cannot ascertain the number of nonresident taxpayers because some full-time residents earn too much to qualify for the exemption. Further, owners of undeveloped or vacant parcels, which bring money into town coffers with no attendant burden on services, cannot qualify.
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Chelsea, for example, has about 3,100 taxpayers who have qualified for the exemption out of a total of 5,000 taxpayers. Its assessor’s office spokesperson has stated that there are other factors, such as the exact length of time spent at a residence, that make it difficult to determine whether a taxpayer is a full-time resident or not.