Tuesday, April 11, 2006

Property Tax Reform

Well, it’s property tax week in the Senate. At this point, it may be helpful to discuss exactly what we’ll be voting on and exactly what we won’t be voting on. As most of you know, the Senate rejected the House plan out of hand.
The House bill morphed, however, into one full cent added to the sales tax in return for the elimination of school operating taxes on owner-occupied homes valued at up to $180,000. The bill removes of that same property tax on most (not all) cars and, finally, a circuit breaker. The circuit breaker does this: It prevents anyone from paying more than 5% of their gross household income, as defined on their federal tax return, in property tax on their primary residence.

We’ll see plenty of amendments to the bill over the next few days, and I’ll vote for the ones that actually reduce property tax. I won’t vote for ones that perform a bait and switch, that is remove property tax in favor of a new tax that actually increases your overall burden. An example of this would be an open-ended plan to bring school funding to the state level without a defined method of redistribution. Such a plan might actually increase your tax burden if the redistribution plan turned out to require more money than taxpayers currently pay for school operations.