Stop Giving Property Tax Breaks to Senior Citizens

If the government does not reduce the cost of public services, then a special tax break for one group merely forces everyone else to pick up the slack.

"Our seniors should not pay property taxes," says Rep. Nancy Mace (R–S.C.).

Normally, I'd advise against paying much attention to what Mace says and even less to what she posts on Twitter. Mace is one of the most performative and vapid members of Congress—a tall task, if you're familiar with her competition. She's most well-known for having meltdowns in airports, engaging in weird bits of performance art, and terrorizing staffers, all apparently guided by the old axiom that there's no such thing as bad publicity.

But there is such a thing as bad policy, and Mace's endorsement of expanding property tax breaks for senior citizens is exactly that.

Unfortunately, this is an idea that seems to be suddenly gaining traction with more serious Republican elected officials. Indiana Gov. Mike Braun told reporters this week that he's hoping to create a new tax break for older residents who have paid off their mortgages.

"Once you get to 65, maybe you ought to have some relief from your own government to not have property taxes after that," he said.

Yes, as a libertarian writing for a libertarian publication, I am obligated to pause for a moment and acknowledge the obvious fact: Lower taxes are better than higher taxes. Government policy should always be oriented towards allowing people to keep more of their own money, rather than obligating them to shovel it into the bottomless maw of government at all levels.

But specialized tax breaks for people within certain age brackets make very little sense—and they don't actually lower taxes. If the government does not reduce the cost of public services, then a special tax break for one group merely forces everyone else to pick up the slack.

A special tax break targeted specifically to senior citizens is worse. The median household headed by someone over age 65 had a net worth of more than $400,000 in 2022, according to Federal Reserve data. For those under age 35, the average was $39,000. However you look at it, elderly homeowners are plainly not a demographic that is desperately in need of tax relief—and giving property tax breaks to the old means pushing the entire property tax burden onto relatively poorer households.

It's also important to keep in mind that senior citizens are overwhelmingly the biggest beneficiaries of government spending. Social Security and Medicare account for more than one-third of all federal spending—and those "expenditures on the elderly dwarf all other publicly funded welfare benefits," as Chris Pope, a senior fellow at the Manhattan Institute, has noted. Seniors are, on average, collecting far more in Social Security and Medicare benefits than what they contributed during their working years.

The federal government's massive wealth redistribution machine is showering older Americans with money seized from the paychecks of younger, generally poorer, working-age people. But when it comes time for senior citizens to help pay property taxes—which foot the bill for schools and other state and local government services in most parts of the country—politicians want to give the olds a free pass. How is that fair? Where's the payroll tax break for Americans under 40?

Exempting older people from property taxes has some unfortunate side effects, too.

Yes, the intention behind these policies is to make it easier for Granny and Gramps to stay in their home as they grow old. But downsizing should be a normal part of life. Increasingly, it's not. A 2024 survey from Freddie Mac found that nearly 70 percent of baby boomers—who account for 20 percent of the U.S. population but 36 percent of all homeowners—planned to stay in their homes for the foreseeable future.

That's fine for them, but it reduces the number of homes on the market, and the reduced supply likely increases housing prices for everyone trying to buy.

At the same time, remember that exempting or reducing taxes for some people means pushing more of a tax burden on everyone else—in this case, all homeowners under age 65.

In other words, younger Americans who want to buy a home are facing artificially low supply, the resulting higher prices, and then (if they are able to afford a house despite those hurdles) end up owing a larger share of the property tax burden. All so that wealthy retirees can keep their empty nests.

Government policy doesn't need to (and shouldn't) help boot Boomers out of their homes. But it also shouldn't help them stay there longer.

The final kicker here is that Mace's and Braun's states—like most states—already offer some form of property tax relief to senior citizens. South Carolina exempts the first $50,000 in property value from taxation, but only for residents over age 65 (or disabled or blind). Indiana automatically reduces seniors' tax bills by up to $150.

Politicians are understandably looking for ways to address Americans' worries about the cost of living. Even so, these proposals to eliminate property taxes for senior citizens amount to nothing more than a promise to deliver even more special tax treatment to a cohort that's wealthier than average, receiving outsized government benefits, and already getting special tax treatment.

Instead of promising more tax breaks for senior citizens, we need elected officials who will reverse those foolish policies already on the books. Mace is wrong. Our seniors should pay property taxes, just like everyone else.