Options for Reducing Property Taxes

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Options for Reducing Property Taxes
David L. Sjoquist
Towards a Better Understanding of Property Taxes
Proposed Policies September 11, 2008 Atlanta,
Georgia
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What is the problem?

• 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

• Property taxes are too high

• Local governments are spending too much

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Three Options for Reducing Property 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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(No Transcript)
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Prop Tax Reduction 5,156 million Increased
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
million Matching Grant is 50 million Case
B Prop tax increases to 52.5 million Matching
Grant is 52.5 million
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Case C Prop tax increases to 54
million Matching grant is 52.5 million
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III. Targeted Tax Credit
Credit Property Tax in excess of some
fraction of income
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Example Property tax 1500 Income
30,000 Fraction 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
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For copies of reports, see the FRC
website http//FRC.GSU.EDU
A Brief History of the Property Tax in
Georgia David L. Sjoquist
Fiscal Research Center Andrew Young School of
Policy Studies Georgia State University Atlanta,
GA   FRC Report No. 182 August 2008