“Universal Homeowner Tax Relief Act” Would Benefit More Than 30 Million Property Owners Who Do Not Itemize on Federal Returns

Washington, D.C., October 31, 2007 – Reps. Rush Holt (NJ-12) and Rahm Emanuel (IL-5) today will introduce legislation that creates a new property tax deduction for American homeowners who are suffering from high property tax bills. The “Universal Homeowner Tax Relief Act” would allow homeowners who currently do not itemize on their Federal tax returns to take an additional standard deduction for the state and local property taxes that they pay. The bill creates an additional standard deduction of $250 for single filers and $500 for joint returns for state and local real property taxes paid or accrued.

“Homeowners in New Jersey and across the country already deal with high property taxes – on top of that, they shouldn’t be penalized for filing a standard deduction,” Holt said. “We’re introducing this legislation today to ensure that hardworking taxpayers are also eligible for additional relief.”

“Millions of homeowners are facing soaring property tax bills and declining home values. The tax code compounds this problem by excluding up to 30 million middle-class homeowners who don’t itemize on their tax returns from being able to deduct their property taxes. This legislation will end the property tax inequity and allow all homeowners to receive property tax relief,” Emanuel said.

In 2005, there were 72.3 million owner-occupied households in the United States, but only 40.5 million taxpayers claimed an itemized deduction for real estate property taxes. The more than 30 million homeowners who don’t currently benefit from property tax deductions include elderly homeowners who no longer itemize in order to receive a mortgage interest deduction, but are still subject to high property taxes.

The standard federal tax deduction is adjusted each year for inflation, but that adjustment does not take into account the rising property tax values and increases. Based on Census data, the total amount of state and local property taxes paid in the United States increased by 50 percent from 2000 to 2006. Over the same period of time, inflation increased by only 17 percent. Over that time, median household income actually dropped by 2 percent.