Our New Tool Shows What Corporations Gain and Residents Lose
One of the three amendments you’ll see on your ballot this fall asks if you support developing an unspecified cap on property taxes. Our staff have reviewed public data to develop a county-level model of the possible impacts of a cap. Our model does not currently cover municipalities, which would also face revenue losses and service cuts if a tax cap were implemented.
Property taxes enable counties and municipalities to provide police, fire, and emergency medical services. They fund parks, rec leagues, and libraries. Schools and community colleges depend on property taxes to build and maintain facilities, and public works departments use them to fill potholes, pave streets, fix sidewalks, and pick up the trash.
A blanket 1-cent reduction in the property tax rate statewide would cost residents $23.7 million in funding for local services provided by properties worth more than $10 million, and would cost counties $215 million. That’s the equivalent of 3,585 teachers, 3,502 sheriff’s deputies, 3,751 paramedics, or 510 new classrooms for each cent of the tax rate lost.
The tool below has two views: one showing the benefit to the top 10 taxpayers in each county compared to the median homeowner, another showing the overall impact to each county’s budget.
nc-proptax-cutMethodology
Our analysis relies on the real property database at NC OneMap, County Assessors’ offices, the annual audit reports submitted to the Local Government Commission by each county, and the NC Department of Revenue’s appraisals of public utilities, which are available on request from their office. We worked with a summary of those appraisals prepared by colleagues at the NC Housing Coalition.
We default to the county’s most recent report of their top ten property tax payers.
When that report is unavailable, we’ve reviewed NC OneMap for extremely valuable individual properties and for high value conglomerates held by recognizable parent corporations.
Since counties often report both the real property and the personal property held by the top ten taxpayers, and OneMap reports only the value of real property, our impact analysis for counties that did not report their top ten property tax payers in the annual financial report is a floor, not a ceiling.
The precise mechanism of this loss is complex. The constitutional amendment Republicans have placed on the ballot specifies a levy limit, not a rate reduction or a rate cap. Property taxes in North Carolina are levied per $100 of property value and are calculated by multiplying the value of a property by the jurisdiction’s tax rate.
For example, a $100,000 home in a county with a $0.50 tax rate would pay $500 in taxes: $100,000 x $.0050 = $500. That $.0050 is a $0.50 tax rate adjusted for the “per $100 value” of North Carolina convention.
If it’s more helpful to see the “per $100 value” removed from the property’s value first, you can think of this formula as: $100,000 ÷ 100 = $1,000 and $1,000 x $.50 = $500.
