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Homestead Exemptions: The Equivalent
of Getting Milk From Half-Starved Cows |
| [Reprinted from The
Freeman, October, 1938] |
Once more -- alas when will it end! -- we are treated to a proposal for
the alleged aid of the politically much-cultivated homeowner, a proposal
which would make the acquisition of unencumbered homes definitely harder
than now. An Associated press dispatch states that Senator Sheppard
(Dem.), Texas, urged a Senate subcommittee to recommend his
constitutional amendment exempting homesteads from taxation up to $5,000
in valuation. The amendment, if enacted, would prohibit political
subdivisions to tax homes up to $5,000 except to pay outstanding bonded
indebtedness.
Of course we are treated to the usual misleading ballyhoo. Senator
Sheppard stated -- what is probably true -- that more than two-thirds of
Texas families are landless and homeless. And then he further stated
that ''to correct this situation" exemption laws have been passed
not only in Texas (but in eleven other states. The Senator is quoted as
saying that removal of taxation from small homesteads would "halt
and reverse the deadly nation-wide drift of our people into migratory
tenancy." Senator Neely (Dem.), West Virginia, chairman of the
Senate subcommittee, is reported as remarking that the Sheppard
amendment is "very appealing." And in the same news item a Mr.
Frank Putnam of Houston, Texas, is referred to as "leader of a
national movement for homestead exemption."
Without at all questioning the sincerity of Senator Sheppard, or of
others in public life who may support his view, we can nevertheless
truly say that the senator has hit upon a proposal which, if adopted in
the only way it is likely to be adopted under present conditions of
pressure politics, would make home ownership for the poor harder to
achieve than it has ever been before in our entire history. True, the
scheme might relieve of taxes those who are already prosperous enough to
own their homes. But these, in Texas at least, are, by Senator
Sheppard's own statement, not more than a third of the families. And
unless the expenses of our states and local governments are to be
drastically cut, the money now raised by taxing homesteads MUST BE
RAISED IN SOME OTHER WAY. Then HOW shall it be raised? If present trends
are followed, it will be raised by increased sales taxes and other taxes
falling heavily on the poor. Those, therefore, whom Senator Sheppard
would, presumably, rescue from the unhappy condition of tenancy will be
more hopelessly in that condition than previously.
Down in Senator Sheppard's state there was an old farmer who had more
cows than he was able to provide with good pasture. One herd he put into
a field where the grass and clover were pretty good. But another herd he
put Into a field where the pickings were indeed very poor. The cows of
the first herd gave a good supply of milk; those of the second were
somewhat disappointing. But the farmer, Sam Barsambus, had an
inspiration. He wanted to "encourage" the giving of more milk
by the cows of his second herd. So he rewarded the cows of the first
herd, which were giving plentiful supplies of milk, by running his
mowing machine over the field occupied by the second herd, cutting off
what few clumps of high grass and clover he could find there and giving
this as extra feed to the cows in the first herd. This policy, Sam
thought, would make the cows in the second herd realize that virtue was
duly rewarded and would cause them to give more milk. Senator Sheppard
may not know Sam, but "he sure is like him!"
But suppose the taxes now levied on homesteads are made up for -- as
they are hardly likely to lie in these days of cigarette, gasoline and
sales taxes -- toy higher taxes on other kinds of property, such as
stores and factories and apartment houses! We must have stores and
factories, of course, and city people of small incomes, who cannot
afford homesteads, must often live in apartment houses as tenants. What
if the resulting added burden on these types of capital discourages the
building of them and makes store and tenement rentals higher than they
now are? Would such higher rentals for rooms and tenements and
apartments help those who must live in them, to save and buy themselves
tax-exempt homesteads? And if rentals for store apace are higher, who,
in Senator Sheppard's thought, will finally pay these rentals? Will it
be only a few rich business men, and never either the small and
struggling merchant or the general mass of consumers?
Such a proposal as this of Senator Sheppard certainly does not go to
the roots of the evil which he is ostensibly seeking to cure. At best it
could be only a surface remedy, even if it did not make the evil
distinctly worse.
That the senator's scheme might tend in some degree to increase the
number of persons holding formal title to the homes they occupy, we need
not deny. Suppose Smith owns three houses and, since only one is his "homestead,"
has to pay taxes on the other two, in which Jones and Wilkina are
tenants; but these two will also become tax-exempt if they are purchased
by Jones and Wilkins respectively. Jones and Wilkins, however, are too
poor to buy homes and really pay for them, and the added sales taxes and
other taxes likely to be levied under Senator Sheppard's plan, to make
up for the abolition of the tax on homesteads, certainly won't help
these tenants to save the money to pay for Smith's houses. But Jones and
Wilkins may become titular owners nevertheless.
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