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In addition to repealing them, options include enacting de minimis exemptions for firms with small amounts of property, expanding existing de minimis and universal exemptions already existing in statute, permitting localities to lower TPP taxes through lower millage rates or assessment ratios, and streamlining rules related to depreciation of TPP and the declaration of taxable TPP to tax authorities. State and local governments have many options to alleviate the burden of TPP taxes. Different types of TPP often receive preferential treatment depending on how the property is used or where it is invested, further distorting economic decision-making. Taxes on tangible personal property are a source of tax complexity and nonneutrality, incentivizing firms to change their investment decisions and relocate to avoid the tax. For states reporting, personal property as a proportion of the average state tax base has declined from 11.27 percent to 9.98 percent from 2006 to 2017. Of states reporting personal property tax data, state reliance on personal property in 2017 ranged from 1.79 percent to about 29 percent of state property tax bases. Tangible personal property taxes are levied on property that can be moved or touched, such as business equipment, machinery, inventory, and furniture.įorty-three states include TPP in their property tax base. Many state and local governments impose ad valorem property taxes on tangible personal property (TPP) in addition to property taxes applied to land and structures. Note: The author thanks Brittany Moore for contributing to statutory research for this piece. |
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