Jeff Burdick and his next-door neighbors have nearly identical two-story rowhouses, on the same block of East Clement Street with the same public schools and the same city trash pickup. But one striking difference is the $5,300 he pays in yearly property taxes — more than both his neighbors combined. The reason behind Burdick's disproportionate tax bill is Maryland's Homestead Property Tax Credit, which caps his neighbors' taxes but not his, because he moved to Riverside many years after they did. "I don't think it's fair," said Burdick, 37, who works in accounting. "Regardless of whether someone's been there 30 years or two years, I'm paying for the same services they are — but I'm basically paying more." The huge tax disparity is not just a result of how the homestead credit works, however. It's also an example of how it doesn't work. One of the houses next to Burdick's is getting a two-thirds discount, even though it doesn't qualify for the program because the owners are renting it to someone else. The situation on Clement Street is playing out on block after block across Baltimore, an investigation by The Baltimore Sun has found. Since the late 1970s, when it was devised as a low-cost way to keep a lid on tax increases, the homestead credit has morphed into a massive subsidy fueling widespread inequality — a problem made worse by errors in billing and inadequate oversight. Today the program lops off at least 50 percent of the annual tax bills for more than 13,000 city homes. Some of those large breaks are a consequence of the wild real estate market of recent years, which let homeowners lock-in low tax levels even as the value of their homes soared. Many are still paying well below full freight several years after the housing boom turned to bust.
[Read More...]