To the editor:
I read with interest Michael Wise’s column on the residential exemption and Steve Picheny’s response. I would like to share some thoughts.
First, an explanation. The residential exemption, like all property class tax classification options, is the sole purview of select boards. The residential exemption creates an exemption that lowers the taxes of most full-time residents, while raising the overall tax rate. Thus, all seasonal residents, investor-owners, and full-time residents with high-value properties pay higher taxes, while most full-time residents get a break.
The genius of the residential exemption is that the benefit is weighted to provide the most relief on a percentage basis to the lowest valued residential properties. These are exactly the types of properties that first-time homebuyers, working families, and seniors of modest means own. The law states that no property owner, even those with the most modest homes, can enjoy a tax cut of more than 90 percent, so even under the residential exemption, every homeowner pays at least some property taxes.
The residential exemption is an option in the toolkit that any city or town can adopt, like a split rate between the residential and commercial classes. A number of select boards in the county have adopted a split rate with regard to the residential and commercial classes. None as of yet has adopted the residential exemption. Who has adopted it? The municipalities on Cape Cod that most resemble South County: Nantucket, Tisbury, and Provincetown for example. It is important to note that Boston, Brookline, Somerville, and Cambridge have also adopted it, meaning that a seasonal resident whose primary residence is in one of these high-priced municipalities already enjoys the benefits of the residential exemption in their primary community.
As for the argument that it will cause rents to rise, well, rents have ballooned in the Berkshires without the residential exemption. My take is that landlords will charge market rents; in other words, what the market will bear. No one I know who rents property does so on a cost-plus business model.
It is also important to note that local towns get a significant portion of their revenue from the Commonwealth in the form of Chapter 70 (school aid), Chapter 90 (highway aid), and myriad other programs or legislation like the recent $5 billion Affordable Homes Act. Approximately 55 percent of the taxes collected by the Commonwealth come from personal income taxes. Nearly all locals who earn income, no matter how little, pay these state income taxes. Out-of-state seasonal residents pay state income taxes to their home jurisdiction, not to the Commonwealth. The point is the overall tax burden to support our local communities is paid more heavily by in-state residents than out-of-state ones.
Many, like Mr. Picheny, have argued, in the most divisive of terms, that this legal option that select boards must consider on an annual basis is unfair. Let’s talk about fairness. Daniel Gleich analyzed the Census’ 2021 American Community Survey and found that, nationally, 2.39 percent of homes were second homes. Compare that to seasonal communities like Stockbridge, where, officially, that number is 43 percent and, unofficially, I estimate the true number to be 10 to 20 percent higher.
The fairness argument seems to be one predicated on a comparison of folks with means. Namely, the homeowner who doesn’t need a tax break and who resides here gets one, while the homeowner who doesn’t need a tax break and doesn’t reside here pays more.
While effective sophistry, in my humble opinion, this is precisely the wrong framing of the argument. To argue over what is fair to the top two or three percent of folks in the country ignores the massive benefits to middle-class homeowners.
In my actual job, I interact daily with parents of high school-age children. I know firsthand how a few thousand extra dollars a year can move the needle on these families’ household budgets. Same for elderly homeowners. When the tax bill comes in, it gets paid. For seniors of modest means, what do they cut back on to pay their taxes? The answer is food, medicine, the budget for a daily beverage at the coffee shop, the occasional concert at Tanglewood. The result of ballooning tax bills on these two types of taxpayers is far more impactful than the alternative extra annual cost of $500 to $1,500 on the wealthiest among us.
The residential exemption option was recently expanded from 35 percent to 50 percent only for the Cape, islands, and the Berkshires, namely for communities designated as seasonal by the Commonwealth. When folks in our community position this option as “divisive,” they are encouraging division. When they position this option as “taxation without representation” they ignore the fact that, by definition, a seasonal resident can choose to make their Berkshire home their primary voting residence by simply spending six months and a day or longer here each year. How about we avoid ginning up opposition in the most divisive of terms, knowing full well that elected leaders are hesitant to embrace something that might be divisive? It’s a self-fulfilling way of getting your way.
Meanwhile, we have all seen the hollowing out of the middle class both here at home and throughout the country over the last several decades. We have all seen how much harder it is for a young family to buy a home now than it was when our parents were young. We have all seen the explosion of income inequality everywhere in the United States based on the many lobbying efforts to lower every sort of tax paid by the wealthy.
I would say to those who are lucky enough or talented enough or whatever enough to able to afford two or more homes, and for whom these arguments do not resonate: Consider the impact of that hollowing out on your own personal interest, namely your ability to visit the Berkshires or maintain your home here. It is the middle-class teenagers who work the seasonal jobs each summer. It is the middle-class parents who work at the nonprofits and as landscapers, plumbers, electricians, and builders. It is the middle-class municipal workers who work on your behalf and keep your water, sewer, police, fire, and every other town hall department running smoothly. It is the middle class in the Berkshires who are the secret sauce that make the Berkshires work. It is the middle class that is literally under siege.
In my time in public service, I have met so many incredible full-time and seasonal residents. You all bring so much to the table. You are the human component that makes this place special. Folks in my position are faced with impossible choices right now: How do we fund expanded ambulance/EMS services and roads and bridges and vocational schools and basic infrastructure like clean water while not making it even harder on the essential middle-class residents whom we must protect to protect the Berkshires? Please, do not suggest as we navigate these tough choices that we do so out of animus or resentment or divisiveness. It is simply not the case.
Patrick White
Stockbridge
NOTE: Patrick White is a member of the Stockbridge Select Board; however, he writes the above as a private citizen.
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