Property Tax Circuit Breakers (Policy Focus Report)

Fair and Cost-Effective Relief for Taxpayers

Author(s): Bowman, John H., Daphne A. Kenyon, Adam Langley, and Bethany Paquin
Publication Date: May 2009

$15.00; 56 pages; Inventory ID PF019; English; Paperback; ISBN 978-1-55844-192-7

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Property Tax Circuit Breakers Full Report	PDF	4.52 MB

Abstract

Property tax circuit breakers can be used to increase tax equity by reducing the most onerous property tax burdens as measured in relation to income. This is particularly important for households at the lower end of the income distribution, and for households in states with high property taxes. By targeting property tax relief to those most in need, circuit breakers promote tax equity at minimal cost to state and local budgets, while preserving the basic nature and strengths of this tax as a source of local revenue. Although circuit breakers have great potential for improving property tax fairness, many programs fall short of ideal.

This report covers the rationale for providing property tax relief to those who have a high relative tax burden. It compares the fairness of various criteria used by states for eligibility, and illustrates types and key features of property tax circuit breakers. Ten pitfalls with existing tax circuit breakers are described along with solutions to address inadequate property tax relief for those with the highest tax burden. It covers three approaches to administer property tax circuit breaker programs to provide greater relief to those in need. Guidelines for elected representatives and tax policy advocates to improve tax circuit breaker rules are provided. Recommendations for the best design for property tax circuit breakers are included in this policy focus report.