efforts to eliminate property taxes<\/a> on a homeowner’s primary residence face a difficult path.<\/p>\nIn Georgia on Tuesday, a state constitutional amendment that could have cut property taxes for homeowners by 75% or more failed when all but one Democrat voted against it. Because such amendments in Georgia require a two-thirds vote by legislators, the plan backed by Republican state House Speaker Jon Burns needed at least 21 Democratic votes.<\/p>\n
The Georgia bill could be revived, but House Republicans said they would also begin looking at more limited ways to provide property tax relief that wouldn’t require a constitutional amendment.<\/p>\n
In Florida, House lawmakers passed a proposed state constitutional amendment to phase out property taxes for nonschool purposes over 10 years. The proposal, which would cost an estimated $13 billion in forgone revenue, awaits Senate action. But a key state senator has signaled that his chamber is unlikely to agree, instead saying senators favor something less generous and more tailored to the needs of individual counties. Lawmakers have said it may take a special session to reach a deal.<\/p>\n
Thomas Brosy, a senior research associate at the Urban-Brookings Tax Policy Center, said eliminating property taxes is \u201cvery unlikely to happen.\u201d<\/p>\n
\u201cCompletely slashing them is really unrealistic, since it really is the largest source of on revenues for most local governments in the United States,\u201d Brosy said.<\/p>\n
Even the plan rejected Tuesday in Georgia was a step back from the original plan to phase out homeowner property taxes by 2032. Tuesday’s version would have cut, but not necessarily eliminated, property taxes on a primary residence, while encouraging local governments and schools to instead rely on sales taxes to fund operations. It would also have raised taxes on sales of computers to data centers to offset some revenue losses.<\/p>\n
State House Ways and Means Committee Chairman Shaw Blackmon said the measure would have provided \u201cdramatic savings for homeowners.\u201d<\/p>\n
\u201cWe\u2019ve all received emails from constituents worried their skyrocketing property tax will force them from their homes,” he said in a debate on Tuesday.<\/p>\n
But state House Democratic Minority Leader Carolyn Hugley called the bill an election-year \u201cexercise in cold, hard politics.\u201d She and other Democrats said that in many cases, local governments wouldn’t be legally able to raise sales taxes enough to offset the billions in property taxes that would be lost.<\/p>\n
\u201cThe math\u2019s just not math-ing. It just does not add up,” Hugley said. “And this is not a responsible thing to do.\u201d<\/p>\n
Other states are looking at shifting from property taxes to sales taxes as well. South Dakota Gov. Larry Rhoden proposes letting counties impose a half-percent sales tax and devoting the proceeds to property tax credits for homeowners. Last week, Rhoden, a Republican, launched a website estimating how much homeowners would save annually on property taxes, ranging from $428 to $1,227. However, it doesn\u2019t count how much people would pay from increased sales taxes. <\/p>\n
In Michigan, Republican state House Speaker Matt Hall last week proposed raising taxes on currently untaxed services and using the money to erase the state’s share of property taxes, the state real estate transfer tax and Michigan’s personal property tax. Any agreement may not come until lawmakers finalize the state budget in the fall.<\/p>\n
One issue with a shift to sales taxes is that it may shift the tax burden from richer to poorer people, Brosy with the Urban-Brookings Tax Policy Center said.<\/p>\n
\u201cThey try to get it to the next best thing or the next available thing, which is the sales tax, which in itself is a lot more regressive and tends to fall a lot more on lower-income families compared to the property tax,\u201d he said.<\/p>\n
Another issue with shifting to sales taxes is that some local governments have few sources of retail sales to tax.<\/p>\n
\u201cNot all locations have the same opportunities to replace that revenue,” Bhatt of the Tax Foundation said. “And that often is missed in the discussions.\u201d<\/p>\n<\/div>\n
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