We’ve written about almost every big angle in the ST3 debate, but a smaller one hasn’t really come up outside comment threads. The property tax component raises howls from “fixed-income” retirees who state that the property tax bill will overwhelm their incomes, presumably forcing them to move. The ensuing comment war is not a credit to either side.

The basic contour is that someone says their tax bill will be too high given their income, generally implying a fairly lofty home valuation. Some other commenter offers “helpful” advice about how they can come up with the cash by downsizing, moving out of Seattle, etc., if not tarring the original commenter as, essentially, a rich person trying to avoid taxes. Then a senior accuses his counterpart of being a rich techie trying to force out others, shortsighted young people ignorant of their future status as a retiree, etc.

It gets unproductive quickly. But let’s extract some common points that I’d hope we can agree on. First, that anyone with a little empathy can understand voting against a measure with as large as impact as forcing one to move. Indeed, I can’t say that in their place I would do otherwise. At the same time, I’d like to have the decency to be apologetic that my circumstances were blocking much-needed improvements in transportation, education, or housing supply. But there’s a natural, and not entirely unhealthy, prejudice towards avoiding disruption in people’s lives, even if it means a slightly worse future.

And perhaps some people simply comment because they want their anxiety to be heard. But are there broader policy implications? King County and Pierce County have special property tax exemptions for seniors that make less than $40,000 or meet other criteria. Snohomish has a somewhat more complicated framework. As a political matter, these are almost certainly a vote-maximizing strategy, shielding the costs of new programs from the most likely voters.

On the other hand, property taxes on seniors don’t make the measure any less progressive. The owner of a million-dollar home in Seattle today pays no more than 26% of a $40,000 income, well below the 33% threshold for affordable housing if the mortgage is paid off. ST3’s property tax component costs the owner of that million-dollar home no more than a further 0.625% of their income. It’s hard to tell a 30-something with a similar income but a young child, student debt, shaky health coverage, a horrible commute, and no real prospect of owning a conveniently located home* that only they should bear a burden, because someone else with none of those problems doesn’t want to monetize even part of their extensive net worth.

* If you’re wondering, this does not come particularly close to describing me.

45 Replies to “Asset Rich and Cash Poor”

  1. It’s not much help for ST3, but we need to change the conversation around aging in place. It’s not a success for a seniors to stay in the house in which they raised their kids, depending increasingly on volunteer chore help, and becoming increasingly more isolated in their car-dependent homes as driving skills wane. I get that change is disruptive, especially for the elderly (I’ve seen it in my own family), so the key to aging in place is moving to a suitable home for one to age in place while one is still young enough to make it a home. This has the bonus of freeing up family-size housing for families and making those large assets more available for use.

    1. The fundamental problem is that the nature of the city and region has changed since those houses were built or those people bought them. In the 1970s, 80s, and 90s houses, condos, and apartments were dirt cheap and everybody could afford one in their desired neighborhood (if they weren’t a janitor with aspirations of Medina). Even in 2007 things were getting more difficult but significantly more affordable than now. The reason for this is the population increase combined with the influx of six-figure tech workers and cash-paying rich (including those cashing out a house in California where prices are higher). The population has increased but the number of housing units hasn’t kept up. And the number of walkable, transit-rich, culturally-interesting neighborhoods really hasn’t kept up. The main reason for this is the refusal to upzone single-family areas, which are 75% of Seattle’s housing land and an even larger percent of the suburbs. So people who bought houses when houses were cheap and everybody could afford one, now want to remain in those houses for thirty more years and pass it on to their kids, when hundreds of thousands of people can’t afford a house and a lot of them can’t even afford an apartment in the city, or won’t be able to in a few years, or will be homeless when they retire and can’t afford $2000/month rent. The only way out of this is to allow single-family lots to be converted to duplexes, houses with ADUs, and small (4-8 unit) apartment/condo buildings (which are less expensive than large buildings and mom-n-pop owners can finance themselves). So please, just some single-family homeowners allow their house to be replaced with a duplex and you can live in one half and another family can live in the other half. Tell the city to allow that. (It was in a HALA draft but was later squelched.) Unless we have a policy like that, it’s hard to sympathize with fixed-income homeowners who want to keep what has become an extraordinary privilege over other people.

      1. Just as a point of note: my next door neighbor in Ballard just sold her home. Her husband recently passed away, and they had lived there since the early 1950’s. She is in her later 80’s and hadn’t been able to do much maintenance, so effectively the house is a teardown.

        However, even as a complete teardown, the 12,000 sq.ft. lot is sub dividable, so she was able to sell the place for $750,000 (they originally bought it in ~1954 for $8,000). Using that huge windfall, she moved into downtown Ballard into a condo on a transit line. Now her house is in the process of demolition and being turned into two $1.4 million dollar new homes.

        It’s an interesting process, where an elderly home owner made out like a bandit. A developer is coming in and building two monster homes and too, will make out like a bandit themselves. However, anyone looking to find an affordable home can look elsewhere.

      2. How about telling the city to encourage construction of condos/apartments with more than 1 bedroom? We need to aspire to making downtown more than a place where only single/childless people live.

      3. Downtown (meaning the area between Stewart Street, I-5, and Yesler Way) will always be the most expensive because the richest tycoons will want a condo with prestigious address there where they can walk to the Symphony and the Paramount and the best restaurants and meet their colleagues in the highest-end hotels. There’s nothing we can do about that so downtown is a lost cause. The tycoons will go for downtown condos and waterfront mansions, so we need to focus on the other areas that are beneath them.

    2. Michelle, at age 71, I would most like to finish my life in clean, cheerful, well-built quarters that, like my shoes, comfortably fit me.

      And pleases whoever agrees to live with me. By past experience, a studio or one-bedroom place is fine, so long as the bathroom is mine, and the kitchen has walls.

      With a cafe using my brand of coffee close by, and a public library branch In a neighborhood where people like me make our living operating and designing machinery. More or less Ballard as I found it.

      But most of all, an easy walk to frequent region-wide electric transit. For which I’d be grateful to pay my share of the income I’d need for the lifestyle above. Now would someone please tell me:

      What in the name of Someplace Eternally Across the Street From a Supermall do people in this State have against a graduated income tax, which is far and away the fairest to everybody that pays it?

      There’d be less demand for Charter Schools if we’d stop Leaving Every Child In Math Class Behind. The Door.

      Mark Dublin

  2. It doesn’t help the dialogue that those with the loudest volume complaints have the most “house” in the “house rich and cash poor” game.

    Lack of apartments in familiar, defended as single family neighborhoods makes “staying where you always lived” a less flexible concept. Likewise, without better transit, keeping the car (and then needing a new one) to stay in that particular house adds to the expense taxes are blamed for.

  3. The problem with having an aging population is we have to choose between investing in the future or in the past. Baby boomers will never see the point in investing in education or infrastrucure because they won’t be around to benefit from it.

    It might be a jerk thing to say, but the more retirees move away the better out regions finances will be, and the easier it will be to invest in the future.

    Thankfully, most returees bought their homes as a way of saving for retirement, so I think we will see tons of people moving out in the next 10 years. Likely the puget soon will get younger even if the country gets older.

    1. Seattle has a long tradition of supporting school levies. Not all boomers are just out for themselves, and some of them have grandkids. Your point is well taken that some of the elderly won’t want to invest in the next generation, but a lot of them will. Even if they’re more willing to invest in schools than transit. That’s another issue.

    2. But at 70 years some of us are still good for 40 more years of being non-peak transit users and supporters.

      Michelle has it right that “aging in place” is an oversold crock of horse doo doo.

      Keep working on getting mixed housing types and put it near the bus as well as train (it’s fun to have transfer options.. ’cause we have all day to get there ;-))

      You even want the “Bungalow Bills” to stay as they will pay the taxes (after all said and done) just to have the entertainment of being a drag on “runaway progress” :-)

      PS no one is a better supporter of public education than those of us who enjoyed the benefit of it when no one thought to question the cost.

    3. Brendan – that is the most ageist comment I have read or heard in a very long time. It’s as if you are too small minded and young to know that one day your income, options and choices are going to be very limited and you’ll have people like yourself, that speak like ‘jerks’ making those choices for you. Downtown is already being designed for the single, young rich person. That’s not new knowledge. I read back through your post and feel like I fed a troll..maybe I did, but a young troll at that.

    4. Also, I don’t think that discouraging a particular age demographic from living in a city is any better for the city than discouraging people from certain income groups or ethnicities or any other category. Cities are best with a mix of people — old, middle aged, young, rich, middle class, lower income, and so on.

    5. Even people who want to right-size their dwelling for the future can’t afford one unless they already own a house or move thirty miles out and counting.

    6. Congratulations, Brendan. We were wondering whether your present employer would keep you on when for a week or two now that after 8 tomorrow night he won’t need anymore copywriters specializing in insulting deceased war hero’s mothers.

      But you at least deserve a good reference for the skill your boss values most. Terrific departing performance, being able to keep a whole internet full of professionally focused people from paying attention to anything but you for at least half an hour.

      Wouldn’t count on contributing much to Seattle’s economy though. That pink envelope on your desk contains standard form letter that your severance check can be picked up from accounting same day your attorney tells you you don’t have enough money to sue to get it.

      One thing I’ll give you, though. Anybody now at retirement age who’ll let themselves be called a Baby Boomer deserves a lollipop for an apertif and a diaper for a business suit. Though a Brooks Brothers’ hoodie with a Google patch isn’t Puttin’ on the Ritz either.
      Anyway, we can spare some pity for a generation believing they were Youth Personified who have now produced the oldest two people ever to run for President of the United States. Neither of whom, incidentally, Knows HOW GOOD YOU YOUNG PEOPLE GOT THINGS! Why Back in My Day….I forget what.

      Oh, I remember now: Don’t remember to vote, Brendan!


  4. The thirty year old may have a child, job, student debt, etc etc, but the senior has a lot more health problems, and Medicare doesn’t make that cost disappear.

    1. Yeah, if I were to add my newborn son onto my work’s healthcare plan, it’d be $450 a month, jumping next year to $750 a month. PER KID. And that doesn’t include co-pays, medications, and other fees.

      This 34 year-old would be jumping over the moon if I could Medicare cover my kids and all I had to get was supplemental healthcare insurance.

      1. Wish I could share my Medicare. Wish those younger than me by a bit, as well as age peers, hadn’t *so* wanted out of pension plans. I did pay from very young age for disability insurance that now pays a pension, and, for sure many many folks just didn’t plan for costs to keep up a house in any sort of city or economy (or see anything but a house as a plan)

        Wish HALA was way further along and my little house could go to developer of “four flats” with shared laundry, solarium and bicycle parking.

      2. I don’t know anybody who wanted out of a pension plan. My generation wishes we had that choice, but it’s only available in a few large companies, and even there it’s closed to those who weren’t already in it ten years ago.

      3. Pension isn’t ne sweatily the way to go. There’s an 84 year old where Inwork that is still there thanks to his former employer raiding the employee pension fund.

  5. Without a doubt the Baby Boomers are the Most Selfish Generation. They were given every support imaginable and then they took those supports and used them as fuel for their tax cut fires.

    They are the first generation in American History to leave their children worse off than they were. Transit, Housing, Education, Wages. Name it, they wrecked it.

    *slow clap*

    1. I’m not entirely convinced of that. The self described “Greatest Generation” were responsible for an awful lot of the tax cutting zeal, and for much of the racism that enabled it.

    2. It cuts both ways. There’s an argument that boomers are taking from their parents’ investment and not giving to their kids, but there’s also an argument that they’re caring for both their aging parents and their boomerang young-adult kids who can’t make it in the current economy. In my own family my parents’ generation (1950s Silents) is also struggling with not having the standard of living they expected and that society told them everybody would have. My generation (X) was the first to confront that as young adults, to not have pensions or affordable healthcare or housing, but it also affects older people, all generations living today.

  6. For God’s forget Brendan! At this very instant, ST-3 is being last-minute amended to make every LINK route into BRT on GP lanes also carrying non-driverless SOV’s that are also SUV’s! With no tolls except for cars with more than one person!

    And the whole trolleybus fleet is getting smoke-stacks, with the rear sections of all the artics being converted to coal tenders (those little cars full of coal that used to follow locomotives). And every shared bike now has a front wheel with pedals on it seven feet in diameter!

    And the FBI director is pedal-to-the-metal headed for Congress to report progress of investigation whether Brendan is or is not a Russian hacker disguised as Anthony Wiener! Meanwhile, warning to LINK operators that panicked badgers fleeing from candidates’ heads are so slippery your track brakes are useless.

    How are we ever going to make Transit Great Again? Or even Low Mediocre!


  7. If these guys need to see some evidence that ST3 is needed, I suggest they go and sandwich them selves on Link during a peak commute.

    I used Link for the first time in 2 years today (after moving well out of Seattle to afford a home and switching to Sounder). I used to take Link from University street, and there would be empty seats, today I got on at Westlake to China Town to make my Sounder connection and Link was crammed full.

    Second point, if they cant afford their lifestyle, I suggest they sell up and move somewhere that’s with-in their means.

  8. The problem is that a failure of ST3 doesn’t really solve the high property tax issue for someone in this situation. The issue they have is the skyrocketing property values. An ST3 failure or passage is a difference of a few months or years before things become too high to afford.

    The backlash will look like our property tax limits in Oregon: 3% per year increase of assessed value in 1995. The end will create a slowly dwindling revenue supply to fund just about everything, and a tax haven for large landholders.

    1. God no, Prop 13 hell is just what we don’t need. Eyman’s already got annual spending caps that are less than inflation. I don’t think a property tax freeze is likely though. There are a lot of young people who are being seriously screwed and won’t want to give an extraordinary gift to a dwindling number of long-time homeowners, plus they’ve seen what happened to California because of it.

      1. How easy was it to get a house or apartment in Portland in 1999? Never mind, I know. Circa 2002 I I visited a friend who was renting a 1905-era house in the Hawthorne district for a few hundred a month — less than $600 probably. He was a tech worker who was taking a year off and living off his savings. It was the same vintage as my 3 BR apartment in the northern U District for the same price. So at that time everybody could live where they wanted and pay for it with just a bit more than minimum wage. So a property tax freeze for longstanding homeowners wouldn’t be such a burden on everybody else. But that’s night and day compared to the current situation.

      2. And the skyrocketing price of a place to live wouldn’t be such an issue if there were more of it available.

        Since your friend lived here, they’ve built four buildings on Hawthorne. One where the abandoned Arby’s was on 34th, one where the big old mansion at 29th was (the entire house got moved), and out on 48th or so there was a really ugly office building that got torn down.

        The huge vacant lots by Burgerville between 7th and 11th? Still there. once they are paid for there is little incentive to develop something, even if the actual market value could justify a 20 floor structure. The property tax limit has, in that way, encouraged the housing shortage.

    2. It depends on where you are. If everyone’s rates go up, then it doesn’t matter. But if your rates go up more than your neighbors, then it could be a burden.

      In general, our property taxes aren’t that high. It is our sales tax that is very high. It will get higher if ST3 passes. Weird that no one is talking about that, given that sales taxes are such a big deal in this city and everyone, without a doubt, pays them.

      1. Property tax is less than $4 billion of the $27 billion in new taxes over the lifetime of the plan. It is weird that the salience is greater than the larger MVET (~$7B) and sales (~$17B) taxes.

        If you’d asked me a year ago, I’d have guessed the MVET would be the hot button tax issue. Maybe Tim Eyman’s diminished stature had something to do with that.

      2. You can always do with a less expensive or no car. You can purchase fewer things to reduce sales tax impact.

        If you fall outside the income requirements then property taxes are a bit harder to avoid unless you are completely homeless.

      3. Glenn, that’s probably part of it. Downsizing a house to avoid property taxes is an emotional matter of more import than skimping on a few goods subject to sales tax.

        Even if the tax hit isn’t very large. Not that many people have paid attention to math of how much they’ll pay in one tax vs another. Even NoST3 is pimping the total tax payment, not the cost of any particular tax.

        The age distribution of #NoST3 might have something to do with it too.

      4. Eymen wants to yank the MVET out from under ST3 I believe. $30 car tabs is sancrosanct apparently. I guess we should be glad we get $30 for infrastructure rather than $5 or $0. As for property tax, it’s an emotional issue for some reason. Probably because owning a house is the American Dream. Sales tax is invisible because you don’t get a total bill once a year; it trickles off in droplets and nobody knows how much they’re paying per year. That’s doubtless why it’s the easiest tax to raise.

  9. About generations. They’re best considered not as the space between dates on gravestones, but a shared set of ideas and assumptions. Generations end when the ideas their members share cease to work. This evening’s comments show a good example of a necessary change.

    Specifically that the Law of Supply and Demand now entitles us, the People, to the use of our Government to recover the cost of the public infrastructure we Supply from the profit-oriented private companies that Demand it in return for their Presence.

    Including the disabling of critical miles of high speed Interstate highways at the time we need them most, and the obliteration of thirty years’ land use planning. Remedy starting with the cost of the transit system that developers’ customers Demand as an inducement to live here.

    Of course the rules of business dictate that if our price is now too high, the world is a place a lot bigger and flatter than Seattle. Possibly lowering housing prices to a level attracting a wider variety of personal income levels, working in a set of industries who will consider doing business in Seattle worth what it costs.

    But the changes we need will above all else require that one bad idea go through the shredder. “Not Gonna Happen!” Especially debilitating to say, because it immediately renders itself true.

    Mark Dublin

    1. Generations also show in what part of life somebody experienced something. I don’t put a lot of stock in precise boundaries between adjacent generations, but if you go out twenty or forty years, the shared ideas you’re talking about have substantially changed. In the movie “Dogfight” Rose and her mother watch the Kennedy assasination on TV. They have an overlapping but different context of experiences to compare it to. What Rose Senior experienced and the messages society drilled into her, Rose Junior learned as history, more incomplete and detached. One’s teens and twenties are particularly influential.

  10. Some of the pushback on property tax increases because (in Seattle, especially) several significant levies have been approved in recent years. That’s certainly worth discussion – whether the projects are worthwhile, and whether property tax is the best way to fund those that are. But much of the pushback is beyond such policy questions – some is self-interest, some is human-nature loss aversion (who complained or even really noticed when taxes went DOWN between 2007 and 2010 or so?), some is just plain resisting the inevitable compromises that come with empty nests, flattening income, and other age-related changes.

    I’m a (near) empty-nester with a too-large house, facing the difficult, drawn-out decision if and when to downsize, and sorting out what I can afford. It happens to all of us, and if I make the decision to stay I WON’T complain about rising property taxes. This is an entirely normal and foreseeable issue – as a society we don’t owe people like me a guarantee of affording life in a large house that we won’t really need anymore. Sympathy, yes. Subsidy, no.

    If the issue is that one’s house is appreciating FASTER than average, then a thought-experiment is apropos. Would you take this deal-with-the-devil: your property tax amount is hereby frozen, but so is the market value of your house. If you would (honestly!) take that deal, then you can probably approximate it by taking a reverse mortgage, or some other financial steps.

    More likely, you would NOT take that deal – you view your house as an investment, and depend on its appreciation. And you perhaps look forward to cashing in, or passing the windfall on to your heirs. If you complain about your rising property taxes under THOSE circumstances, then sympathy gets to be a tough sell too.

  11. Perhaps I will agree to downsize rather than age in place if all of you feeding at the public trough give up your early-retirement benefits, above-market pensions and other absurd benefits that require such high property taxes in the first place.

    By the way, why is it selfish to age in place but not selfish to demand to live like a prince/princess (nice home in an urban center close to work) without creating any value or earning it?

  12. I’ll tell the old geezers the same thing they’ve been telling me my entire life. Pick yourself up by your bootstraps. It’s not that hard. Earn some more money. If you can’t afford it, you are living beyond your means. Yes, all advice I received from the 60 and over crowd who had the luxury of heavily subsidized and affordable public college, a high minimum wage relative to cost of living, and good-paying jobs that didn’t require a degree when they were younger. Oh, yes, it’s so easy. I am sorry, but not sorry. I have little sympathy. Karma sucks. Sell your million dollar homes and move somewhere else if you can’t afford the taxes.

    1. Well, I wouldn’t have put it quite that bluntly, but…..
      there’s dozens, perhaps hundreds, of huge older houses in inner east Portland that have been converted into multiple unit housing.

      Something like that converts your property into an income.

      Washington lacks an income tax.

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