— from Cindy Wolf —

The idea of a property tax rebate for renting to employees brings a couple of different consequences to mind that would need to be thought about and addressed.  I don’t have the data to know how much of a problem these things would be, but I would like to know before supporting such an approach.

1) If a tax break depends on the principal renter being an employee in the county, does that person, and often, their children, have to move in the off season when employment dries up?  

2) We have two streams of income for the County Government, sales taxes and property taxes.  Would the housing of “employees” create enough sales tax to offset the loss in property tax?  Presumably properties with rentable guest housing tend to be worth more and a, say, 1% percent break on such properties would take a bigger than 1% chunk of money out of the county’s revenue.

3) Would this property tax relief be a fair ask of the community or would it exacerbate structural income inequality by creating a situation where those who can afford property with an extra cottage/cottages,  in exchange for housing people who can’t afford to buy property, are paying a lower property tax rate than year-round working folk and tradespeople who can’t afford property with a cottage?  In the long run, given rising property values, this may exacerbate conditions driving skilled workers off island.  

4) Could the very wealthy then claim a tax break for renting to their own groundskeepers, housekeepers and nannies? Wihat happens if the rent gets raised and the employee’s wages do not? Will the employer be required to pay the extra wages that will be paid back to them in rent?  

5) Would this policy stimulate development and infill outside of the UGA?  

The elephant in the room here is the growing income inequality in our country brought about, in part, by inequitable tax structures that result in the accelerated accumulation of wealth to the already wealthy.  What we see on our island with the shortage in availability of housing for the working poor and middle classes is a microsm of a national problem amplified by restrictied land availability and a remote location accessible to non-resident working poor and middle classes only by ferry.  I think we need to be very careful with the tool of Property Tax incentive.  

Perhaps a better way of approaching tax incentive would be that for any property with one or more buildings permitted suitable for residential occupancy, a higher rate on the property would be paid per building not rented out or owner occupied and a still higher rate per building used for transient rentals.  If all buildings are rented out on a yearly lease or owner-occupied, the property tax stays at the base level.

I welcome thoughtful critique of the consequences of this proposal and whether it would be effective in accomplishing the goal of increasing access to housing stock for year-round rental.

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