ATRA
SUPPORTS
HB2508
Reduced
Assessment
Ratio
For
Business
Property
Taxes
SUMMARY
HB2508
provides
more
equitable
treatment
of
business
property
taxes
by
reducing
the
assessment
ratio
on
business
properties
(class
1)
from
25%
to
20%,
phased
in
over
five
years.
In
an
effort
to
address
possible
shifts
in
tax
liability,
the
bill
increases
the
current
35%
homeowner
rebate
each
year
over
the
five-year
period,
reaching
a
maximum
of
42%
in
the
fifth
year.
Basis
for
ATRA’s
Support
Arizona
has
one
of
the
most
complicated
property
tax
systems
in
the
country.
One
such
complexity
is
Arizona’s
classification
system.
Arizona
classifies
property
according
to
usage
into
nine
classes.
The
largest
classes
are
business
(class
1),
which
is
taxed
at
25%
of
value
and
residential
(class
3),
which
is
taxed
at
10%
of
value.
The
assessment
ratios
are
used
to
shift
taxes
from
one
class
of
property
to
another.
In
Arizona’s
case,
the
tax
burden
is
shifted
so
that,
dollar
for
dollar,
business
pays
at
least
2.5
times
more
than
residential.
There
are
two
primary
policy
concerns
that
result
from
Arizona’s
use
of
the
classification
system:
- The
higher
ratios
on
business
property
result
in
much
higher
tax
burdens
on
those
properties.
The
enclosed
table
of
Arizona’s
2004
effective
tax
rates
shows
that
the
property
tax
burden
on
commercial
and
industrial
property
(2.75%)
is
almost
three
times
higher
than
residential
(0.99%).
On
a
national
level,
Arizona
homeowners
rank
in
the
bottom
half
while
industrial
property
annually
ranks
among
the
top
ten.
The
practical
effect
of
these
high
tax
rates
is
that
very
few
capital-intensive
manufacturers
are
willing
to
locate
in
Arizona
without
some
form
of
a
tax
break.
Many
of
the
recent
manufacturing
plants
have
been
placed
in
foreign
trade
zones
(class
6),
which
are
taxed
at
only
5%
of
value.
When
fully
phased-in,
HB2508
will
provide
a
meaningful
impact
on
Arizona’s
high
business
property
taxes
as
well
as
Arizona’s
economic
development
efforts.
- Second,
every
study
of
Arizona’s
property
tax
system
has
noted
that
the
subsidy
provided
to
the
homeowner/voter
undermines
the
accountability
that
is
so
important
to
any
tax
system.
Arizona’s
property
tax
structure
insulates
the
homeowner/voter
from
the
true
cost
of
government
spending.
The
enclosed
pie
chart
reflects
the
increase
in
total
property
taxes
since
1980.
Primary
and
secondary
property
taxes
have
collectively
climbed
from
$821.6
million
to
more
than
$5
billion
–
an
increase
of
more
than
513%.
ATRA
ASKS
FOR
YOUR
SUPPORT
BY
VOTING
YES
ON
HB2508
