It was Jeremy Dodge’s inability to pay nearly $18,000 in back taxes that ultimately cost him the deed to his 16-acre homestead in East Montpelier. But how could man who failed to crack the five-figure threshold in annual income accumulate such as massive property-tax bill?
Vermont’s progressive tax code reduces the obligations of lower-income homeowners by limiting their burden to a percentage of their annual income. Residents’ ability to avail themselves of “income sensitivity,” however, requires them file a “homestead declaration” with the Vermont Department of Taxes, something Dodge apparently failed to do.
Between 2010 and 2012, according to state records, no one filed a homestead declaration on the Dodge property. Dodge, who says he never made more than $10,000 in each of those years, was charged full freight on property taxes as a result. His bill for tax year 2012 – the property was at that point appraised at $233,700 – came in at $4,597.11.
Income sensitivity would have cut the bill to a fraction of that amount – the law limits property-tax bills of low-income homeowners’ to about 5 percent of annual income. According to East Montpelier town records, Dodge assumed ownership of the property deed in 2009, after which the delinquent taxes began piling up.
Oliver Olsen, a former Republican lawmaker from Jamaica who last year served on the House Committee on Ways and Means, fired off a letter to Gov. Peter Shumlin Wednesday noting Dodge’s misfortune.
“As one of the architects of Act 60, and one of its most ardent defenders, you often cite the effectiveness of Vermont’s income sensitivity program,” Olsen wrote. “Thus, you are undoubtedly aware of the significant tax reductions available to homeowners with low to moderate incomes.”
Olsen said that many homeowners fail to file the homestead declaration, given the “complexities of Act 60/68 (that) leave many Vermonters confused and lost in the system, particularly the elderly and those of diminished capacity.”
As an elected official, Olsen said that when he encounters a low-income neighbor or constituent with a particularly high tax bill, “my first question was always, ‘have you filed your homestead declaration, and have you applied for your property tax prebate/rebate?’”
“Perhaps you didn’t think to ask that question; perhaps you did; maybe there is a good reason why Mr. Dodge is not eligible for a property tax rebate,” Olsen wrote. “But if he was eligible, and was not in a capacity to avail himself of the tax relief that could have kept him in his home, I think you owe it to Mr. Dodge to help rectify the situation, because at face value, someone with knowledge of the system should have asked why his tax bill was so high to begin with.”
Olsen said that as an education-funding expert, Shumlin is obviously aware of “a number of remedies in statute to help with extraordinary tax situations, such as the one that Mr. Dodge found himself in – everything from a tax abatement to the Tax Department’s authority to grant extraordinary relief under 32 V.S.A. § 3206.”
“It sounds like Mr. Dodge just needs a little help from someone who knows a thing or two how our property tax system works,” Olsen wrote.
Records on file at the tax department list Dodge as the property’s owner in 2012, and the “estate of Ernest Dodge,” – Dodge’s father – as the owner in 2011 and 2010.
Dodge inherited the homestead from his parents.
Vermont law limits to a a single year the period for which homesteads held in estate can qualify ofr tax relief. But municipalities can, upon request and at their discretion, authorize hardship abatements for homesteads held in estate after the first 12 months. And after April of 2012, when the property was listed in Dodge’s name, he likely would have been eligible for income sensitivity.
Olsen said that if Dodge was eligible for income sensitivity during even a portion of the time period during which the back taxes were incurred, then he hopes the governor will lend a helping hand.
“I still have vivid memory of your State of the State address last year, particularly your reminder of how Vermonters help their neighbors, because that is the Vermont Way,” Olsen wrote. “I sincerely hope that you are willing to help yours.”