By Seth Richardson
In these uncertain economic times, with the value of a dollar being decimated by President Obama’s minting of money by the truckload, most people are hunkering down and trying to figure out how to survive the onslaught of socialism that’s coming.
One of the biggest fears of homeowners, particularly the elderly and retired, is the potential for losing our homes to the tax man. Property taxes are a necessary evil, but the consequence of failing to pay your property tax is disproportionate to the government’s need. The idea that your home can be taken from you at the muzzle of a gun by government thugs because you can’t pay your taxes is an evil, pernicious holdover from feudal days when the King owned everything and you lived on his land by his sufferance, and only if you could pay your taxes.
People on fixed incomes who have spent a lifetime working and saving and paying their mortgages responsibly are always under the threat of seizure of their homes by the government if they find themselves unable to pay their property taxes. This fear is real, and it keeps all of us from being truly free and truly kings of our own castles. We don’t really own our property, we rent it from the government, and that’s wrong. There should be a way to truly exercise the constitutional right to own, use and enjoy private property free from the threat of government seizure.
Landowners should be allowed to pay off their lifetime individual property tax liability in one lump sum if they are able to do so.
Just think of the freedom one can experience knowing that your home is truly yours, and that you are beholden to no one. You will be free to spend the rest of your life in your home and know that if you fall on hard times, you can never be ejected from your home merely because you failed to pay your taxes. You might have to live by candlelight, and haul water in a bucket, but you’ll always have a roof over your head.
It works like this: You file an application with the appropriate taxing agency requesting an assessment of your property’s current value and your predicted remaining life span, which is taken from a standard actuarial table used by life insurance companies. The government then calculates the total tax payable over your predicted lifetime at the current mill levy and presents you with the bill, which you can pay in a lump sum or in a few installments.
Once the bill is paid in full, the taxing authority appropriately marks your record as tax-exempt until your death. When you die, and your property passes to your heirs, the exemption is removed and the new owners have to pay taxes again. For couples, the exemption lasts till the remaining spouse dies.
This is a win-win situation for both the homeowner and the government. The homeowner gains the security and comfort of actually owning his property without obligation to anyone, and the government gains an immediate infusion of tax money that it can use to fund infrastructure improvements and repairs. Or, if the government is wise, it will invest the money and thus be able to recognize a much greater gain in tax revenues overall through compound interest than it would by collecting the taxes year by year. The only thing the government gives up is the ability to raise the mill levy on that property in the future, but this potential loss is completely offset by having the future taxes in hand for investment.
For the homeowner, not only does he receive the intangible benefits of truly being free, but he also locks in the mill levy rate, thus saving himself some money in the future.
For retired people on fixed incomes who own their homes outright, it may be impossible to come up with a large lump-sum payment, but this is where the “reverse mortgage” industry comes into play.
In a reverse mortgage, the mortgage “buyer” is the bank, and the mortgage “holder” is the homeowner. The bank pays the homeowner a negotiated fixed amount on a regular basis as a way of extracting equity from the home to meet the needs of the homeowner while still allowing the homeowner to live in the home. When the owner dies, the bank pays the balance to the heirs and takes possession of the house.
By using a reverse mortgage, the homeowner can make the lump sum property tax payment and live in freedom and security until his death. And those with sufficient savings and pensions can also enjoy tax freedom by investing in their security and in their community with a lump sum tax payment.