The proposal (HR 162) restricts the growth of assessments to 3% or the rate of inflation, whichever is less.
The analysis makes two great points in particular:
Similar to a Taxpayer's Bill of Rights (TABOR), HR 162 places an arbitrary limitation on the growth rate. If the rate of inflation slips down to 1.6%, as it did in 2002, the assessment of Georgia property is tied to a national economic phenomenon (inflation) rather than the true value of homes in the local area. If legislators believe that property taxes should be capped, then there should be a thorough and detailed debate on what that percentage restriction should be. Is 3% the right level? Is 1.6% or other levels of recent inflation? Washington, DC caps at 12% while Arkansas caps at 5%. This fundamental change in the taxing structure deserves open debate on how and why to set the cap at a certain rate.Secondly, the analysis offers a better targeted and more progressive way of providing property tax relief - enacting a circuit breaker:
Circuit Breakers provide tax relief by restricting property taxes to a certain amount of income. When taxes exceed that amount of income, the excess tax is refunded or credited through the income tax system. As of 2005, thirty-five states and the District of Columbia had some form of circuit-breaker program.As we have noted many times already on this blog, capping rates of growth simply don't make for good tax policy.