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HomeMy WebLinkAboutResolutions - 2016.03.30 - 22264option of,the foregoing Resolution. -,n•11'4110°.- 1604.4.7:- ..1%n'- - Commissioner District # Commissioner District* \irva,- - il L6 MISCELLANEOUS RESOLUTION #16080 BY: Commissioners John Scott, District #5 and Shelley Taub, District #12 IN RE: BOARD OF COMMISSIONERS - OPPOSITION TO REPEAL OF MICHIGAN PROPERTY TAX EXEMPTION FOR DISABLED VETERANS To Elie Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen: WHEREAS Michigan House Bill 5169 would eliminate the property tax exemption for veterans who are totally and permanently disabled as a result of military service, have received specially adapted housing from the Veterans Administration (VA), or who are rated by the VA as individually unemployable due to a service connected disability.; and WHEREAS while HB 5169 would create an income tax credit for disabled veterans, the legislation would effectively increase the tax burden on veterans by $10,000,000, according to the House Fiscal Agency; and WHEREAS the men and women who answered the call to serve in the military and protect our nation deserve nothing less than our complete gratitude and appreciation; and WHEREAS many of those veterans of military service paid a dear price for our freedom: limbs lost on far- flung battlefields, shattered lives and life-long disabilities WHEREAS there are approximately 2,800,000 veterans receiving benefits from the Department of Veterans Affairs for disabilities incurred while defending our Nation; and WHEREAS as the late Secretary of Veterans Affairs Jesse Brown stated, all Americans have a "solemn obligation to ensure that the men and women disabled in our nation's defense must never be forgotten or neglected"; and NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners opposes House Bill 5169 and any other measure that would eliminate the Michigan property tax exemption for qualified disabled veterans. BE IT FURTHER RESOLVED that the Clerk of the County of Oakland is directed to submit a copy of this resolution to the Board's legislative lobbyists, the Office of the Governor, Senate Majority Leader, Senate Minority Leader, Speaker of the House, House Minority Leader, members of the Senate Appropriations Committee, members of the House Appropriations Committee and the Oakland County delegation to the Michigan Legislature. Cednmitsioner District# /./ 1\ CommFsioner District # Comm issi District # Commissioner District # Commissioner District # Commissioner District # Commissioner District # Commissioner Commissioner District # District # Commissioner Commissioner District # District # Commissioner Commissioner District # District # Commissioner Commissioner District # District # Commissioner Commissioner District # District # Commissioner Commissioner District # District # Legislative Analysis HOTSCAL VETERAN PROPERTY TAX BENEFIT House Bill 5169 as introduced Sponsor: Rep. Earl Poleski Committee: Tax Policy Complete to 2-16-16 Phone: (517) 373-8080 http://www.house.mi.gov/hfa Analysis available at littp:I/www.legislature.mi.gov SUMMARY: The bill would repeal Section 7b of the General Property Tax Act, which provides a tax exemption for the homestead of a disabled veteran who is a resident of the state and meets one of the following criteria: (a) has been determined by the U.S. Department of Veterans Affairs to be permanently and totally disabled as a result of military service and entitled to veterans' benefits at the 100% rate; (b) has a certificate from the VA certifying that he or she is receiving or has received pecuniary assistance due to disability for specially adapted housing; or (c) has been rated by the VA as individually unemployable. The bill amends the Income Tax Act, and the repealer can be found in Enacting Section 1 on the last page of the bill At the same time, the bill would amend the homestead property tax credit within the Income Tax Act (MCL 206. 520) so that the current limits on total household resources and on the value of the residence would not apply to a veteran with a service-connected disability of 100% (or the surviving spouse of that veteran). Currently, a homestead property tax credit cannot be claimed if total household resources exceed $50,000 (and are phased out beginning at $41,000); and cannot be claimed if the taxable value on the property exceeds $135,000 (theoretically about $270,000 in market value). These limits would not apply under the bill, so that veterans with a service-connected disability of 100% would qualify for the homestead property tax credit regardless of household resources and value of the homestead, to the extent that their property taxes exceeded 3.5 percent of total household resources, up to $1,200. The homestead property tax credit, claimed with the state income tax return, allows some taxpayers to receive a refundable credit against the income tax, up to $1,200, for property taxes paid in a tax year. The credit is computed for most filers based on the comparison between property taxes and total household resources. Renters can claim the credit with 20% of rent paid counting as property taxes. However, for a veteran with 100% service disability, the credit can also be claimed based on a formula using a "taxable value allowance" (TAV) of $4,500. The percentage of property taxes refundable as a credit is determined by dividing $4,500 by the taxable value of the homestead. A veteran could choose which of various calculations allowed in the act would produce the larger tax credit. FISCAL IMPACT: As written the bill would repeal the existing property tax exemption for veterans that are 100% disabled. Eliminating this provision would increase property tax revenue by an estimated $16.0 million, of which about $3.5 million would result from the 6-mill State House Fiscal Agency Page 1 of 2 Education Tax that is dedicated to the School Aid Fund. The remaining $12.5 million would accrue to various local taxing authorities. The bill would also increase the number of homestead property tax credits claimed by veterans, and therefore reduce net income tax (and General Fund) revenue by an estimated $6.0 million. The $10.0 million difference between the repealed property tax exemption and the increase in the homestead credit reflects the amount borne by veterans that had been claiming the property tax exemption. Based on the number of exemptions claimed, this averages out to about $1,000 per veteran. Legislative Analyst: Chris Couch Fiscal Analyst: Jim Stansell • This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent. House Fiscal Agency HB 5169 Page 2 of 2 HOUSE BILL No. 5169 December 17, 2015, Introduced by Reps. Poleski, Brett Roberts, Pagel, Bumstead and Forlini and referred to the Committee on Tax Policy. A bill to amend 1967 PA 281, entitled "Income tax act of 1967," by amending sections 506 and 520 (MCL 206.506 and 206.520), section 506 as amended by 1996 PA 484 and section 520 as amended by 2015 RA 179; and to repeal acts and parts of acts. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 506. "Eligible serviceperson", "eligible veteran", and 2 "eligible widow or widower" meane-MEAN a serviceperson, veteran, or Øb Up 3 widow or widower, whose income as defined in this chapter is not 4 more than $7,500.00 per year unless the serviceperson, veteran, or 0 z 5 widow or widower receives compensation paid by the veterans -J -J 0) 7 incurred disabilities and who meets the requirements of the uj Cl) C) 3: 69IS '0N 11 6 administration or the armed forces of the United States for service 03487'15 KAS 2 1 following schedule: 2 War Person Service in Disability % Taxable 3 War Value 4 Allowance 5 6 Indian Veteran or 7 Civil veteran's widow 8 Spanish- or widower 9 American 10 Mexican 11 12 13 World War I Widow or widower 3 months, or 14 World War II of nondisabled 15 Korean or nonpensioned 16 veteran 17 18 19 20 All wars or Pensioned veteran Any 21 presidential or veteran's 22 executive widow or widower 23 order or 24 presidential 25 proclamation 26 27 All wars or Veteran with Any No $2,500.00 No $3,500.00 requirement 10-50 $3,500.00 3 months, or No 1 day with requirement discharge for service- connected disability $3,500.00 1 day with requirement discharge for service- connected disability 03487'15 KAS 3 1 presidential service-connected 2 executive disability or 3 order or veteran's widow 4 presidential or widower 5 proclamation 6 7 All wars or Veteran with Any 60-70-80 8 presidential service-connected 9 executive disability or 10 order or veteran's widow 11 presidential or widower 12 proclamation 13 14 All wars or Veteran with Any 90-100 15 presidential service-connected 16 executive disability or 17 order or veteran's widow 18 presidential or widower 19 proclamation 20 21 All wars or Widow or widower Any 22 presidential of veteran dying 23 executive in service 24 order or 25 presidential 26 proclamation 27 $4,000.00 $4,500.00 No requirement $4,500.00 03487'15 KAS 4 1 Current Serviceperson or Any No $3,500.00 2 service serviceperson's requirement 3 widow or widower 4 Sec. 520. (1) Subject to the limitations and the definitions 5 in this chapter, a claimant may claim against the tax due under 6 this part for the tax year a credit for the property taxes on the 7 taxpayer's homestead deductible for federal income tax purposes 8 pursuant to section 164 of the internal revenue code, or that would 9 have been deductible if the claimant had not elected the zero 10 bracket amount or if the claimant had been subject to the federal 11 income tax. The property taxes used for the credit computation 12 shall not be greater than the amount levied for 1 tax year. An 13 owner, OTHER THAN AN OWNER WHO IS A VETERAN WITH A SERVICE- 14 CONNECTED DISABILITY OF 100% OR THAT VETERAN'S WIDOW OR WIDOWER, is 15 not eligible for a credit under this section if the taxable value 16 of his or her homestead excluding the portion of a parcel of real 17 property that is unoccupied and classified as agricultural for ad 18 valorem tax purposes in the year for which the credit is claimed is 19 greater than $135,000.00 through the 2021 tax year. Beginning with 20 the 2021 tax year and each tax year after 2021, the taxable value 21 cap under this subsection for the immediately preceding tax year 22 shall be adjusted by the percentage increase in the United States 23 consumer price index for the immediately preceding calendar year 24 and rounded to the nearest $100.00 increment. The department shall 25 annualize the amount in this subsection as necessary. As used in 26 this subsection, "taxable value" means that value determined under 27 section 27a of the general property tax act, 1893 PA 206, MCL 03487'15 KAS 5 1 211.27a. 2 (2) A person who rents or leases a homestead may claim a 3 similar credit computed under this section and section 522 based 4 upon 20% of the gross rent paid for tax years before the 2018 tax 5 year or 23% of the gross rent paid for tax years after the 2017 tax 6 year. A person who rents or leases a homestead subject to a service 7 charge in lieu of ad valorem taxes as provided by section 15a of 8 the state housing development authority act of 1966, 1966 PA 346, 9 MCL 125.1415a, may claim a similar credit computed under this 10 section and section 522 based upon 10% of the gross rent paid. 11 (3) If the credit claimed under this section and section 522 12 exceeds the tax liability for the tax year or if there is no tax 13 liability for the tax year, the amount of the claim not used as an 14 offset against the tax liability shall, after examination and 15 review, be approved for payment, without interest, to the claimant. 16 In determining the amount of the payment under this subsection, 17 withholdings and other credits shall be used first to offset any 18 tax liabilities. 19 (4) If the homestead is an integral part of a multipurpose or 20 multidwelling building that is federally aided housing or state 21 aided housing, a claimant who is a senior citizen entitled to a 22 payment under subsection (2) may assign the right to that payment 23 to a mortgagor if the mortgagor reduces the rent charged and 24 collected on the claimant's homestead in an amount equal to the tax 25 credit payment provided in this chapter. The assignment of the 26 claim is valid only if the Michigan state housing development 27 authority, by affidavit, verifies that the claimant's rent has been 03487'15 KAS 6 1 so reduced. 2 (5) Only the renter or lessee shall claim a credit on property 3 that is rented or leased as a homestead. 4 (6) A person who discriminates in the charging or collection 5 of rent on a homestead by increasing the rent charged or collected 6 because the renter or lessee claims and receives a credit or 7 payment under this chapter is guilty of a misdemeanor. 8 Discrimination against a renter who claims and receives the credit 9 under this section and section 522 by a reduction of the rent on 10 the homestead of a person who does not claim and receive the credit 11 is a misdemeanor. If discriminatory rents are charged or collected, 12 each charge or collection of the higher or lower payment is a 13 separate offense. Each acceptance of a payment of rent is a 14 separate offense. 15 (7) A person who received aid to families with dependent 16 children, state family assistance, or state disability assistance 17 pursuant to the social welfare act, 1939 PA 280, MCL 400.1 to 18 400.119b, in the tax year for which the person is filing a return 19 shall have a credit that is authorized and computed under this 20 section and section 522 reduced by an amount equal to the product 21 of the claimant's credit multiplied by the quotient of the sum of 22 the claimant's aid to families with dependent children, state 23 family assistance, and state disability assistance for the tax year 24 divided by the claimant's total household resources. The reduction 25 of credit shall not exceed the sum of the aid to families with 26 dependent children, state family assistance, and state disability 27 assistance for the tax year. For the purposes of this subsection, 03487'15 KAS 7 1 aid to families with dependent children does not include child 2 support payments that offset or reduce payments made to the 3 claimant. 4 (8) For tax years before the 2018 tax year, a credit under 5 subsection (1) or (2) shall be reduced by 10% for each claimant 6 whose total household resources exceed the minimum total household 7 resources amount of $41,000.00 and by an additional 10% for each 8 increment of $1,000.00 of total household resources in excess of 9 $41,000.00. Except as otherwise provided under this subsection, for 10 the 2018 tax year and each tax year after 2018, the minimum total 11 household resources amount is $51,000.00. For the 2018 tax year and 12 each tax year after 2018, a credit under subsection (1) or (2) 13 shall be reduced by 10% for each claimant whose total household 14 resources exceed the minimum total household resources amount 15 established under this subsection and by an additional 10% for each 16 increment of $1,000.00 of total household resources in excess of 17 the minimum total household resources amount for that tax year. For 18 the 2021 tax year and each tax year after 2021, the minimum total 19 household resources threshold amount established under this 20 subsection for the immediately preceding tax year shall be adjusted 21 by the percentage increase in the United States consumer price 22 index for the immediately preceding calendar year and rounded to 23 the nearest $100.00 increment. THIS SUBSECTION DOES NOT APPLY TO A 24 CLAIMANT WHO IS A VETERAN WITH A SERVICE-CONNECTED DISABILITY OF 25 100% OR THAT VETERAN'S WIDOW OR WIDOWER. 26 (9) If the credit authorized and calculated under this section 27 and section 522 and adjusted under subsection (7) or (8) does not 03487'15 KAS B 1 provide to a senior citizen who rents or leases a homestead that 2 amount attributable to rent that constitutes more than 40% of the 3 total household resources of the senior citizen, the senior citizen 4 may claim a credit based upon the amount of total household 5 resources attributable to rent as provided by this section. 6 (10) A senior citizen whose gross rent paid for the tax year 7 is more than the percentage of total household resources specified 8 in subsection (9) for the respective tax year may claim a credit 9 for the amount of rent paid that constitutes more than the 10 percentage of the total household resources of the senior citizen 11 specified in subsection (9) and that was not provided to the senior 12 citizen by the credit computed pursuant to this section and section 13 522 and adjusted pursuant to subsection (7) or (8). 14 (11) The department may promulgate rules to implement 15 subsections (9) to (15) and may prescribe a table to allow a 16 claimant to determine the credit provided under this section and 17 section 522 in the instruction booklet that accompanies the 18 respective income tax or property tax credit forms used by 19 claimants. 20 (12) A senior citizen may claim the credit under subsections 21 (9) to (15) on the same form as the property tax credit permitted 22 by subsection (2). The department shall adjust the forms 23 accordingly. 24 (13) A senior citizen who moves to a different rented or 25 leased homestead shall determine, for 2 tax years after the move, 26 both his or her qualification to claim a credit under subsections 27 (9) to (15) and the amount of a credit under subsections (9) to 03487'15 KAS 9 1 (15) on the basis of the annualized final monthly rental payment at 2 his or her previous homestead, if this annualized rental is less 3 than the senior citizen's actual annual rental payments. 4 (14) For a return of less than 12 months, the claim for a 5 credit under subsections (9) to (15) shall be reduced 6 proportionately. 7 (15) For tax years before the 2018 tax year, the total credit 8 allowed by this section and section 522 shall not exceed $1,200.00 9 per year. Except as otherwise provided under this subsection, for 10 the 2018 tax year and each tax year after 2018, the total credit 11 allowed by this section and section 522 shall not exceed $1,500.00 12 per year. Beginning with the 2021 tax year and each tax year after 13 2021, the maximum amount of the credit allowed under this section 14 and section 522 for the immediately preceding tax year shall be 15 adjusted by the percentage increase in the United States consumer 16 price index for the immediately preceding calendar year. The 17 department shall round the amount to the nearest $100.00 increment. 18 (16) As used in this section, "United States consumer price 19 index" means the United States consumer price index for all urban 20 consumers as defined and reported by the United States Department 21 of Labor, Bureau of Labor Statistics. 22 Enacting section 1. Section 7b of the general property tax 23 act, 1893 PA 206, MCL 211.7b, is repealed effective December 31, 24 2015. 03487'15 Final Page KAS Resolution #16080 March 30, 2016 The Chairperson referred the resolution to the General Government Committee. There were no objections.