Groundhog Day and Our Frozen Homestead Tax Credit Formula

Monday, February 4, 2013 at 4:37 PM by

It’s Déjà Vu All over Again for the Homestead Credit

Over the Groundhog day weekend I was working on the plot for a new version of the Groundhog Day movie – for a remake that I think Columbia Pictures should film in Sun Prairie.  Bill Murray would once again have the lead role, playing a retired former weatherman who now hosts the annual Ground Day event in Sun Prairie, and who has a crush on a Madison-area TV personality, played endearingly by Andie MacDowell.  Sun Prairie’s Jimmy the Groundhog will replace Punxsutawney Phil, of course; and I’ll have a small part as a geeky fiscal policy analyst (a bit of a stretch), in lieu of Ned – the nerdy insurance agent.

The story is set slightly before the next big Groundhog Day celebration.  It’s January 31 and our hero is paying his Sun Prairie property taxes, which isn’t easy for him now that he is retired and living solely on Social Security (after his ex-wife, who ran away with Ned, was awarded his modest pension from the TV station).  Fortunately, the state Homestead Tax Credit provides targeted property tax relief for low-income homeowners and renters, enabling Bill to keep his home. 

The plotline in this remake is different than the original because every morning when Bill awakes it’s still January 31, but 12 months later.  Everything has advanced a year, except for one thing – there’s no change in the Homestead Credit formula.  Each morning Bill is again paying his property taxes, which are higher than the day/year before.  He’s a year older, Andie is a year older, and I’m a year wiser.

Bill’s Social Security income has risen by a few percent, along with his property taxes, but the frozen Homestead formula means that his credit decreases each year.  No matter what he does to change things, the next morning when he wakes up he has a higher property tax bill to pay and a smaller tax credit to cushion the cost.

My geeky role is to explain to Bill why the frozen formula that scares Jimmy deeper into his burrow each year doesn’t at least lock into place the current Homestead Credit.  Instead, the formula pushes it down each year, even though his property taxes are rising and all the other significant elements of the state tax code are adjusted annually for inflation.  Fortunately, I can give Bill a new issue brief on the subject (actually written by Tamarine Cornelius – so let’s remember to include that in the credits), which ensures that the wonky details won’t cut into the screen time for Bill’s efforts to woo the winsome Ms. MacDowell.   

The story doesn’t have a completely happy ending for Bill, who steadily gets grumpier about his larger property tax bill and lower Homestead Credit.  His mood falls like the decline of Homestead tax relief, and Bill’s increasing gloominess turns off Ms. MacDowell – who, in an unanticipated plot twist, falls for the geeky fiscal policy analyst!  With her help, we are able to convince state lawmakers to pass a bill that annually adjusts the Homestead Credit for inflation, like the rest of the tax code.

Bill doesn’t get the girl, but he finally gets some property tax relief, as do thousands of other seniors living on fixed income – many of whom would otherwise become ineligible for the credit as their income gradually climbs above the income ceiling.  

I’m already starting to look forward to the sequels. 

Jon Peacock 

Categories: Blog, Homestead credit, STATE TAXES, taxes | Comments Off on Groundhog Day and Our Frozen Homestead Tax Credit Formula

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