Sen. Mary Margaret Whipple, D-Arlington, has submitted a bill that would allow local governments to give homeowners a rebate as big as 20 percent on their real estate tax bills — potentially shifting municipal tax burdens to owners of commercial real estate. The Washington Post has the story here.
The idea should prove popular to homeowners reeling from a decade of double-digit increases in real estate assessments. During the extended residential real estate boom of the 2000s, residential assessments increased much faster than commercial, which had the effect of sticking homeowners with a bigger share of the tax burden.
Current state law requires municipalities to set the same tax rate for residential and commercial property.
Bacon’s bottom line: I wish I had a bottom line. I’d like to dig a little deeper on this issue. On the one hand, homeowners desperately need relief from soaring property taxes. On the other, the General Assembly probably had good reasons for requiring all forms of property to be taxed at the same rate.
Here’s one thing I fear if the Whipple law gets passed and localities pass the homestead exemption: More dependent than ever upon business tax revenues, municipalities will compete even more fiercely for commercial and industrial investment. That competition will intensify the “beggar thy neighbor” practice in which municipalities seek to maximize their tax prospects at the expense of their neighbors, grabbing the tax revenue and foisting the costs (roads, schools, etc.) onto their neighbors — accentuating the scatteration of development and undermining regional cooperation in land use and transportation.
Meanwhile, we can expect every business lobby in the state to lobby against the homestead exemption. Politicians will be caught between the voters and their financial backers. I will enjoy watching this drama unfold.