Options for Reducing Property Taxes David L. Sjoquist Towards a Better Understanding of Property...
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![Page 1: Options for Reducing Property Taxes David L. Sjoquist Towards a Better Understanding of Property Taxes & Proposed Policies September 11, 2008 Atlanta,](https://reader035.fdocuments.in/reader035/viewer/2022062518/5697bf6f1a28abf838c7d1ed/html5/thumbnails/1.jpg)
Options for Reducing Property Taxes
David L. Sjoquist
Towards a Better Understanding ofProperty Taxes & Proposed Policies
September 11, 2008Atlanta, Georgia
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What is the problem?
•Local governments are spending too much
•Property taxes are too high
•Large annual increases in assessed value•Tax increases are too large
•Not fair/equitable
•Elderly are forced to sell
•Residential vs. business burden is wrong
•Reduces economic development
•Capital gain is taxed but not realized
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Three Options for ReducingProperty Tax Burden
• State funding of education
• Grants to local governments • Targeted tax credits
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I. State funding of education
• Increase QBE to $8,000 per FTE
• Districts under $8,000: eliminate PT
• Districts over $8,000: allow supplement
• Set an allowable annual increase
• Districts assured of annual increase:• From the state• From prop tax
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Current (FY 2007)Revenue
(in millions)Revenue per FTE
Local $5,767 $3,604State $7,201 $4,500Total $12,968 $8,104
ProposalRevenue
(in millions)Revenue per FTE
Local $611 $382State $12,803 $8,000Total $13,414 $8,382
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Prop Tax Reduction = $5,156 millionIncreased funding = $445 million
% reduction in local rev: 89%Districts with 0 tax: 109
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II. Matching Grant
•State grant = fraction of prop tax
•Require an equal cut in prop tax
•Set a limit for increase in grant
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Example
Current Property tax = $100 million
Grant = ½ of prop tax ($50 million)
Cut property tax to $50 million
Future: match prop tax $ for $
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What about the 2nd year?
Suppose increase is limited to 5%
Case A:Prop tax stay at $50 millionMatching Grant is $50 million
Case B:Prop tax increases to $52.5 millionMatching Grant is $52.5 million
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Case C:Prop tax increases to $54 millionMatching grant is $52.5 million
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III. Targeted Tax Credit
Credit = Property Tax in excessof some fraction of income
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Example
Property tax = $1500Income = $30,000Fraction = 4%
4% of $30,000 = $1200
Credit = $1500 – $1200 = $300
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Eligibility and Limitations
• Age• Income• Owner-Renter• Maximum credit
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Relief with 4%Homeowners only
Maximum
Income
AgeLimit
Property Tax Relief(in millions)
% of Owners
None None $400 17.0%$50,000 None $247 12.4%$50,000 62 $98 5.0%
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Fiscal Research CenterAndrew Young School of Policy StudiesGeorgia State UniversityAtlanta, GA FRC Report No. 182August 2008
For copies of reports,see the FRC website:
http://FRC.GSU.EDU
A Brief History of the Property Tax in Georgia
David L. Sjoquist