Fighting a tax myth

The Arizona Republic
Saturday, November 3, 2007
Kevin J McCarthy

Recent stories regarding next Tuesday's school override and bond elections have included claims from a school-district campaign consultant that recent homeowner property taxes increased because "business taxes went down while homeowner taxes went up." This misdirection merits a response.

In recent years, the Legislature did indeed enact changes to business property-tax calculations. However, the impact of those changes on homeowners was addressed in a number of ways.

First, the Legislature increased an existing homeowner tax credit. Two years ago, the state general fund paid 35 percent of a homeowner's school district "primary" tax. This year, the credit is 37 percent and the credit climbs to 40 percent in 2011.

In addition, state policymakers also reduced other school taxes to offset some of the housing market's impact on increasing values. Over the past two years, property-tax rates controlled by the state have been reduced 21 percent. Some of those tax-rate reductions should come in the form of reduced school district primary taxes. I say "should" because taxpayers in some districts may not have received the tax cut the Legislature enacted. If you did not see at least a 27-cent reduction in your school-district "primary rate" on your tax statement, in all likelihood school-district officials made budget decisions in June that took your tax cut away.

The attempt by those advocating higher taxes to shift the attention of voters off them and onto the Legislature is pretty transparent. The most rapidly growing part of property-tax bills (for business and homeowners) is associated with voter-approved bonds and overrides for local governments. Voters should weigh the merits of requests for bond and override taxes. But they should never be misled into believing that any of this is free. - Kevin McCarthy, Phoenix

The writer is president of the Arizona Tax Research Association.