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Homeowners, commercial property owners, need to know future tax obligations

Your conclusion is correct that reducing taxes is attractive for those who pay and the GOP plan is good for business, bad for homeowners. Although your article explains the reduction of assessment valuation ratios, it does not go far enough, given the complexity of Arizona property taxes. Conceptually, it is very simple however: property tax revenue results from assessed valuations multiplied by tax rates.

Unfortunately, the point of initiation of this formula is not assessed valuation or tax rates; the initiation point is the amount of tax revenue desired by the recipient which, when divided by assessed valuations, results in the tax rate. Hence your analogy with “balloons.”

The problem is the government – take your pick at what level, as long as it is a recipient of property taxes – spends money and then expects taxpayers to pay, similar to a spendthrift college student with a parent’s credit card. This is backward. We should have a system that determines the amount the government has available to spend, then legislatures can argue the allocation of such funds.

Professor Hoffman’s conclusion that “Arizona’s tax policies have been kind to homeowners” is devoid of any logic. What is his basis for such a claim, states like New Jersey? My taxes have doubled from 2004 to 2009, yet I have not had any increase (arguably a decrease) in public services.

Indeed, the issue should be about what one receives for his property tax payment and whether such funds are wisely spent for the social good (is our public education any better now than in 2004?). A doubling of property taxes every five years is unsustainable, and it’s certainly more than my retirement income has increased. Indeed, The Wall Street Journal reported on July 28, 2007, that for every $1,000 increase in property taxes, a house is devalued by $12,000. Such taxing has not been “kind” to this homeowner.

A system is needed whereby homeowners and commercial property owners know what their property tax obligations will be in the future so that proper budgeting can apply. Otherwise, pity to the retired couple or those who stretched their budget to buy their first home and now can’t afford it. Prop13Arizona offers such a system wherein values are fixed at purchase price, tax rate is fixed at .05 percent and valuation increases cannot be greater than 2 percent.

Such a system has worked extremely well in California for the past 32 years. Arizona should adopt that which has proven successful.

— David Zacharias is vice-chairman of Prop13Arizona, which supports a ballot measure to establish limits on property taxes.

One comment

  1. I appreciate the goal of Prop13Arizona and its efforts, but I recall the so-called Heiusler Amendent patterned after Prop 13 and endorsed by Howard Jarvis back in 1979. The legislature responded by passing and placing on the ballot constitutional changes that passed in June, 1980, which resulted in the Prop 13-like amendment being defeated in November.

    The problem explained to the legislature was Arizona’s constitution was unlike CA’s in one major respect: You could not freeze property values, it would be unconstitutional in AZ. Now no one, to my knowledge, knows if this is true, but no one wanted to take a chance, hence the rather Byzantine system of property tax rate limits we currently have, combined with ratios for various classes and the famous homeowners’ rebates.

    That system may be broke now, but it is probably makes more sense to fix that one rather than throw it out with the baby with the bathwater by instituting a system which may not pass muster.

    And the place for such a fix is the legislature.

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