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ASK THE EXPERTS

Taxpayers punished by gain in value

POSTED: February 18, 2009 4:00 a.m.

“Georgia’s property tax system is a broken relic of a bygone agrarian-based economy. It fails every test of what constitutes good tax policy. It is not transparent, it is not easy to understand, it is not fair, it is not flat and, worst of all, it does not facilitate accountability.

  

“The most logical plan would be to scrap this 19th-century taxation model and move to one designed for a 21st-century economy. Sadly, few in elected office are willing to embrace this much-needed change, so the least we can do is add accountability. Property tax assessment caps offer real accountability.

  

“It is important to note that no other form of taxation is based on an ‘unrealized’ gain. Owners of stock don’t pay a tax based upon the most recent stock quote.  Instead, tax is paid on the actual market value of the stock at the time of sale.

  

“Perhaps the most troublesome feature of the current property tax system without assessment caps is that taxpayers essentially are punished for the actions of others. We would never accept this from other forms of taxation. Can you imagine an income tax law where you’re required to pay more because your neighbor received a pay raise? This is exactly what happens under the current property tax system.”

  

Sen. Chip Rogers spoke these eloquent words last week in favor of capping ad valorem property taxes at a maximum annual increase of 3 percent. When this bill passes, if it passes, he will be considered one of the first fathers of capping property taxes in Georgia.

  

Opponents suggest such caps are not fair to taxing entities. They claim that when a property has increased in value, based upon the opinion of a government employee, the property owner should be forced to pay more in taxes. That ‘dog won’t hunt’ in today’s environment of rapidly falling property values. Shouldn’t property taxes be fair to the taxpayer in both boom times and bust times?    

  

Property assessment caps can fix this problem. If the local governing body wants to increase your property tax, they must vote to do so. In turn, you also have the power of the vote come election time. It’s called accountability, and it’s a beautiful thing in government, especially when it pertains to raising taxes.

  

Friday, we debated HR 1 for three hours. This is the resolution needed to place the property tax cap on the ballot. It fell short of the two-thirds vote needed. The House did pass HB 233, which would freeze property tax assessments for two years. This should give us enough time to work out differences between House Republicans and Democrats and allow the Senate to do the same.  

  

As I wrote last week, “The House of Representatives delivered on their commitment to fund the Homeowners Tax Relief Grant (HTRG) this year by passing House Bill 143 and sending it to the Senate.” 

  

The bill, if passed by the Senate with a two-thirds majority, would force the Governor to release the funds he has been withholding. That money was appropriated by the Legislature last year. Counties can’t afford to send out additional tax bills for 2008 any more than you can afford to pay.

  

Because of intense lobbying by the ACCG (Association of County Commissioners of Georgia), the Senate did not have the votes to immediately transmit HB 143 to the Governor. This means that we will have to wait until the end of session in June to see if the Governor will finally release these funds. 

  

The more prudent course would have been to release the funds early in the Session. That would have helped cities, counties and school systems manage their funds in a timely manner.

  

Now these taxing jurisdictions are scrambling to make ends meet without knowing if and when these promised funds for 2008 will be released. I wonder if ACCG really helped county governments with their lobbying effort.   

  

All levels of government continue to watch Washington to see if the ‘stimulus’ package pushes any good our way. How would you like to plan your household budgets this year the way local and state government is doing?

  

Amos Amerson can be reached at 401 Capitol, Atlanta, GA 30334; (404) 657-8534; fax (404) 463-2044; e-mail amos.amerson@house.ga.gov.

 

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