Arizona Republican lawmakers are moving to lower property taxes on businesses.
But the chief proponent told members of the Senate Finance Committee on Wednesday that it is being done in a way not to shift the burden to homeowners, and without reducing revenues available to local governments and schools that depend on the levy.
What’s behind SB 1108 is the somewhat unusual system in Arizona where property is valued for tax purposes based on its use.
Residential property, for example, is assessed at 10% of what’s considered it’s “full cash value,” a figure that is supposed to roughly represent its market value. Most commercial businesses, by contrast, have an 18% assessment ratio.
So a home valued at $250,000 would be assessed for tax purposes at $25,000. Everything else being equal, a $250,000 business would have a $45,000 assessed value.
That translates to a difference in taxes, as each jurisdiction’s tax rate is levied based on that assessed value.