Homestead Exemption
What it is: Exempts from taxation the first $25,000 of a home's market value.
Eligible: Ohio homeowners aged 65 and up or totally disabled, with maximim household income of $33,500 (not including social security and certain other pensions).
Old rules: Until 2006 income limit of $26,200 In 2007 income limits were repealed. In 2013 income limit reimposed for new applicants.
Cost: State reimbursed counties in 2011 for $400 million in tax breaks given to 870,568 elderly and disabled property owners.
Local impact: 124,535 exemptions worth on average $436 in savings for residents of Butler, Champaign, Clark, Greene, Miami, Montgomery, Preble and Warren counties in 2011. Total reduction in taxes was $62.1 million.
Source: Ohio Department of Taxation
2014 Election coverage
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Democratic candidate for governor Ed FitzGerald attacked Gov. John Kasich’s tax cut proposal as a gift to the rich and called for the state to resume offering property tax breaks to elderly and disabled homeowners regardless of their income level.
FitzGerald, in Dayton with running mate Sharen Neuhardt of Yellow Springs, denounced the state legislature’s decision in 2013 to repeal the 2007 law that provided the Ohio Homestead Exemption to all elderly and disabled homeowners. The program instead was limited to those who fall under a certain income threshold.
FitzGerald said Kasich should propose reinstating the universal homestead exemption.
FitzGerald said Kasich’s proposed $2.19 billion income tax cut will disproportionately benefit the wealthy while hurting local governments and schools.
He acknowledged that middle class and low-income people would also benefit from some of Kasich’s new proposed tax cuts, but he said it is important to look at the “whole picture.” Kasich’s state budget cuts, he said, have brought increased local taxes.
“The big winners have been the people at the very top end of the scale,” FitzGerald said. “Middle class people are not getting a fair shake out of the whole deal.”
Chris Schrimpf, spokesman for the Ohio Republican Party, defended Kasich’s tax cut plans. “While Governor Kasich continues to fight for tax cuts for the middle class, Ed FitzGerald is fighting against Ohio families,” Schrimpf said in an email.
Ohio’s tax system is broken into nine income brackets. It is progressive, meaning the more someone makes the more they pay in income taxes. Because people at the top pay a higher rate, across-the-board tax cuts tend to favor wealthier taxpayers, some argue. The 8.5 percent tax cut, phased in over three years, would drop Ohio’s top bracket to 4.88 percent by 2016.
Kasich also called for increasing and expanding the state earned income tax credit. He would offset tax cuts by increasing the commercial activities tax, the severance tax on oil and gas producers and taxes on cigarettes, tobacco and e-cigarettes.
Montgomery County Auditor Karl Keith said Kasich’s priorities are “misplaced.” The restriction on the homestead exemption takes away one of the ways people living on fixed incomes can control their costs, he said.
The program has been popular, with more than 48,000 Montgomery County residents enrolled, Keith said.
Kasich campaign spokeswoman Connie Wehrkamp suggested in an email that Neuhardt stood to gain from a universal homestead exemption when she turns 65. But Neuhardt, 62, dismissed that notion on Wednesday, saying her concern is for less wealthy elderly and disabled people who can’t meet the current law’s $33,500 annual income limit.
“I’m happy to pay my fair share,” Neuhardt said.
The state’s homestead exemption began in 1971 and required the state to reimburse local governments and schools for the loss of property tax revenues. Gary Gudmundson, spokesman for the Ohio Department of Taxation, said prior to 2007 the income limit was about $26,200 for elderly and disabled property owners. In 2006, 216,810 people had exemptions at a cost of $70.1 million to the state. By 2011, the most recent year for which full numbers are available, the state spent $400 million for 870,568 exemptions.
Everyone already in the program remains grandfathered in, so the savings to the state under the new income limits would be about $27 million in 2016, Gudmundson said.
FitzGerald will face Larry Ealy of Trotwood in the May primary. Kasich does not have a primary challenger.
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