US Commercial Property Owners Shoulder Increasing Portion Of Tax Burden

by Mike Godfrey, Tax-News.com, Washington

28 January 2005

A national study has shown that owners of US commercial property are coming under a much heavier tax burden relative to residential property owners than they were ten years ago.

According to the study of property taxes paid across all US states in 2004, compiled by the Minnesota Taxpayers Association on behalf of the National Tax Conference, the average ratio of commercial to residential property-tax rates has increased from 2.751 to 1 in 1995 to 3.329 to 1 in 2004.

In simple terms, this means a $1 million commercial property had on average a property-tax rate three times higher than a $70,000 home, it was reported.

It is believed that the rising tax burden on business property has come about as state and city authorities attempt to appease angry residential homeowners, who have been facing mounting property taxes as house prices have increased.

As a result, the number of cities that give preferential tax treatment to residential properties has increased to 43, up from 33 in 1995, the study stated.

Boston was found to have the widest gap between taxes paid by residential owners and those paid by commercial owners and leaseholders, where tax on business premises valued at $1 million was nearly 32 times as high as on a $70,000 home.

New Orleans ranked second, with property-tax rates for commercial-property owners 23 times as high as for homeowners, with New York City (15.2 times higher), Honolulu (5.2 times higher) and Washington, D.C.(4.7 times higher) completing the top five.

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