Commercial property taxed higher than residential, study says

Property taxes are being disproportionately collected from commercial and industrial properties, according to a new study.

“State and local governments routinely target commercial and industrial property for higher tax rates than residential property, forcing owners to pay a disproportionately larger share of the bill for government services,” says the new study by the Tax Foundation.

Commercial and industrial properties only account for less than 25 percent of property valuation, yet when averaged across the states account for 56 percent of all property taxes collected.

Thirty-nine states place a higher rate on commercial properties. Only in nine states are taxes collected equally between residential and commercial properties, those states being Connecticut, New Hampshire, New Jersey, North Carolina, Oregon, Washington, and Wyoming.

“Commercial and industrial property is paying more than its fair share, for the most part,” the study concludes.

“Abraham Lincoln once cautioned, ‘Let not him who is houseless pull down the house of another,'” said Tax Foundation Vice President for Legal & State Projects Joseph Henchman. “By heavily taxing commercial and industrial property to benefit residential property, state and local governments are doing precisely that. A better approach would be property tax systems that tax all property alike.”

While property taxes may be a widely hated tax, they are closely linked with public education funding. The property tax base is connected in many people’s minds with school quality.

“Those who have tried to reduce property taxes and improve school performance at the same time have not met with much success,” education economist Daphne Kenyon wrote in a policy report

The Tax Foundation suggests that commercial properties are heavily taxed so that politicians can more easily lower the tax burden on residents, the majority of the electorate.

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