Tuesday, February 07, 2006

Say What? A Slap to Senior Citizens

The Daily News editorial staff need to go on a field trip to Utah. Here is why. The staff has to visit Utah to see what you can buy for $150.000 to $75,000. Instead they try to use an off hand remark to what a house in Anchorage might cost in Utah. The figure $260.000? Try less than that.

First to the article. http://www.adn.com/opinion/story/7425739p-7336845c.html

Tax truth

Running away from Anchorage means running into real taxes

Published: February 7, 2006 Last Modified: February 7, 2006 at 02:57 AM
It's easy to complain about taxes and government spending. It's a way of life in Alaska, much like talking about the weather, ruts in the roads and moose on the highway.

And it's easy for elected officials to repeat what their constituents tell them, especially if they agree.

But the public needs the full story, not just a sound bite.

For example, the Anchorage Assembly on Friday discussed the School District's request to place $99 million in school bonds on the April ballot.

Assembly Chairwoman Anna Fairclough noted that many seniors are feeling pressured by rising property values, which means rising taxes.

More school bonds would add to taxes. She said an acquaintance had told her he was selling his home and moving to Utah to escape Anchorage's heavy property tax burden.

Someone should tell him Utah has sales and income tax.

Yes, Anchorage has a higher property tax rate than many cities, but that's because we have no sales tax, no income tax, no state revenue sharing, nothing to diversify the revenue sources to run our schools and public services.

But state law does exempt senior citizens from property taxes on up to $150,000 of a home's assessed value, and Anchorage adds an exemption of up to $20,000 of a home's value. Meaning that Ms. Fairclough's acquaintance would pay no taxes unless his home is worth more than $170,000.

For the sake of this discussion, let's assume his home is worth $300,000. He would pay tax on $130,000 of that value, or about $2,100 a year at the average tax rate in Anchorage.

Now let's look at Utah, taking Salt Lake City for example.

Utah state law says homeowners pay property taxes on just 55 percent of a home's value. Using national statistics, an average $300,000 home in Anchorage might cost $260,000 in Salt Lake City. Taxed at just 55 percent of value, that property would ring up $1,150 a year in property taxes in Salt Lake City, about $1,000 less than the Anchorage example. Good news for Ms. Fairclough's acquaintance.

Then start adding. Salt Lake City shoppers pay a 6.6 percent sales tax, which includes state, county and city sales taxes, a mass transit tax and a botanical, culture and zoo tax. And that tax goes on top of everything: Utah taxes food.

Utah residents also pay a state income tax, at a top rate of 7 percent of gross income after standard or itemized deductions. And that top rate is easy to reach -- everything over $4,314 in annual income.

The list goes on. Utah's motor fuel tax is 24.5 cents per gallon, three times the 8 cents in Alaska, which is the lowest in the nation. Salt Lake also imposes a 6 percent "energy tax" on natural gas and electricity.

Let's not judge Anchorage's tax burden by only its property taxes. The grass may look greener elsewhere, but it's those sales and income taxes that pay to keep it so green.

BOTTOM LINE: Look at the whole story in debating whether Anchorage can afford more school bonds.

The editorial revolves around seniors, so here is the tax structure in Utah.


UTAH Sales Taxes

State Sales Tax: 4.75% (prescription drugs exempt); 2% on residential utilities; local option taxes may raise the total tax to 6.35%.

Gasoline Tax: 24.5 cents/gallon

Diesel Fuel Tax: 24.5 cents/gallon

Gasohol Tax: 24.5 cents/gallon

Cigarette Tax: 69.5 cents/pack of 20

Personal Income TaxesTax Rate Range: Low - 2.3%; High - 7%

Income Brackets: * Lowest - $863; Highest - $4,313 Number of Brackets: 6

Personal Exemptions: ** Single - $2,400; Married - $4,800; Dependents - $2,400

Standard Deduction: Single - $4,750; Married filing jointly - $9,500 Medical/Dental Deduction:

Federal amount Federal Income Tax Deduction: 50% of federal taxes

Retirement Income Taxes: Each taxpayer who was age 65 or older at the end of the tax year may be entitled to a retirement exemption of up to $5,700.

A married couple filing a joint return may claim up to $15,000, if they are both 65 or older, depending on their income. This is in addition to the standard or itemized deduction and their Utah personal exemptions.

The deduction and exemption are reduced by 50 cents for each dollar of income exceeding $32,000 for married taxpayers filing jointly, and $25,000 for single taxpayers. Each taxpayer who was under age 65 at the end of the tax year and received retirement income, may qualify to deduct up to $4,800 of the qualifying income.

The deduction is only available to the taxpayer who earned the qualifying income. A surviving spouse is entitled to this deduction for qualified income received on behalf of a deceased spouse; children or other nonspouse recipients are not entitled to the deduction.

Qualifying income for those under age 65 include pensions, annuities, taxable social security benefits (excluding disability and survivor benefits), early retirement distribution if the retiree meets the retirement criteria of the employers plan, and qualified income received by a surviving spouse on behalf of a deceased employee.

For more information, click here.Retired Military Pay: Up to age 65, individual can deduct up to $4,800 of qualified retirement; $7,500 at age 65 or older.

Deductions apply to survivor benefits. Military Disability Retired Pay: Disability Portion - Length of Service Pay; Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless combat incurred.

Retired Pay - Based solely on disability: Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless all pay based on disability and disability resulted from armed conflict, extra-hazardous service, simulated war, or an instrumentality of war.

VA Disability Dependency and Indemnity Compensation: Not subject to federal or state taxesMilitary SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax.

Check with state department of revenue office.

Property Taxes Property taxes are assessed and collected locally. The taxable value of a property is 100% of its fair market value, less any exemptions that may be permitted. The assessed valuation of a residential property is 55% of its fair market value.

The median rate is $1.30/$1,000. Homeowners 65 and older who earn $23,108 or less can get a credit for property taxes paid up to $616, plus a credit equal to the tax on 20 percent of their property's fair market value.

A circuit breaker tax credit for persons age 65 or over (or surviving spouse) permits an abatement or deferral of property taxes but the amount of the credit varies with household income and can apply to the portion of rent that goes to pay property taxes.

Contact the Tax Commission at 801-297-3600 for details or click here for details on tax rates.Inheritance and Estate TaxesThere is no inheritance and the estate tax is limited and related to federal estate tax collection.

Here is what you can buy for $260,000.00


Property Details: MLS #: 551820Price: $254,900Property Type: Single FamilyStyle: Rambler/RanchBeds: 6Baths: 3.00Approx. Square Feet: 3313Project/SubDivision: TRADITIONS County: Salt Lake Neighborhood Statistics Acres #: 0.09 Garage: Attached Roof: Asphalt ShingleExterior: Brick, StuccoYear Built: 1998Landscape: Full Landscaping, Vegetable Garden

Home Interior Features:Basement: FullCooling: Central Air ElectricHeating: Forced Air, Gas CentralFireplaces: 1Flooring: CarpetSchool District: GraniteElementary: PlymouthJunior High/Middle School: EisenhowerHigh School: Taylorsville Get School Information

Here is what you can buy for $120.000.00 to $75,000.00. A senior citizen living on a fixed income in Anchorage would be hard pressed to find anything in that range.

These are other homes.




The issue is disposable income for retired folks on a fixed income and how they can live.

The price of gas in Utah? 12 cents cheaper than what it is here. With the sales tax, $2.23 per gallon. I pay $2.30 at the Holiday near my house.

http://www.utahgasprices.com/ $2.11

http://www.alaskagasprices.com/ $2.21

To see a comparison on the price of gas in Alaska versus Utah go here.


The editorial staff did not mention the Income tax deductions for senior citizens, nor the credit for property taxes. Nor did they mention how much cheaper homes are in Utah. That is the point.

And as for revenue sharing, the State of Alaska reimburses the School District for school projects that are too expensive and the State of Alaska contributes over 60 percent to a school budget that is growing at a tremendous rate.

The issue is how can a retired senior citizen afford the growing debt and cost of the school district on a fixed income. Here is a thought, Anchorage is growing old and who is going to wind up paying for the services? Are you going to take away the exemption or raise it?

Because you will have to or you will have to increase the tax rate on families who are not retired. Either way you parse the argument, the Daily News editorial staff has no business telling the elderly they don't pay enough taxes and that is precisely what they did in their editorial.

The Daily News owes an apology to the seniors of this community for their insensitive and demeaning manner in which they cast aside the true concerns of the elderly.

Update: To those who say property taxes don't affect renters. I just got a twenty dollar a month raise in my rent. I live in a six plex.

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