The property tax law in the State of Georgia is constantly under review and being changed by the state lawmakers. The property tax law is apparently viewed by some as a political tool. Before the recent controversy over the Fulton County Tax Assessor’s 2017 value increases there was already a Georgia politician considering a cap on assessment increases as part of their reelection campaign. Now that Fulton County “caught up to the market” through high percentage tax assessment increases and were forced to rescind the increases there is much more talk about a cap on assessment increases.
Georgia has a property tax law code section that is referred to as 299c. This is a section of the law that caps assessment increases for two additional years beyond the year in appeal if the appeal is settled at the Board of Equalization, hearing officer, arbitration, or superior court. This was added to the law so that if a taxpayer makes the effort to appeal to one of these formal hearings that they do not find themselves back in appeal the next year.
Although this code section is taxpayer friendly it causes inequities in the property tax burden. In a rising market tax assessment are supposed to rise to keep pace. When tax assessments rise with the exception of those property owners that appealed then the taxpayers that didn’t appeal will pay tax on a higher percentage of market value than those that did appeal. Of course the cap on assessment increases only includes three years and at the end of that time the “frozen” values will be increased to the same percentage of market value as the rest of the “neighborhood”.
Although 299c causes inequities in the tax digest, not everyone appeals, and not everyone appeals to a formal hearing in order to get the three year freeze. As a result the inequities are not widespread. However a cap on all tax assessment increases will result in widespread inequities in the property tax burden.
For example, if highly desirable areas are appreciating at twice the rate of less desirable areas, but the tax assessments are limited by an arbitrary cap on increases, the taxpayers in the less desirable areas will pay tax on a higher percentage of market value. This is called a Price Related Differential and is a measure of inequity in tax assessments. Likewise, when higher value properties are taxed at a higher percentage of market value than lower value properties that is a price related differential also.
A recent example is the uproar about Fulton County’s 2017 tax assessments in neighborhoods adjacent to the Belt Line. These increases were based on the sales in these neighborhoods. There is a lot of excitement about the belt line’s potential to revitalize the adjacent neighborhoods and buyers are paying up for nearby properties. But if the increases had been capped at say 3% when actual market values are much higher they would be paying tax on a lower percentage of market value than nearby neighborhoods without the same influence and much lower value increases.
The Georgia property tax law already allows for inequities in the tax burden through the use of that code section called 299c. Now Georgia lawmakers are using the recent uproar about Fulton County tax assessments to propose even greater inequities in the property tax burden. Some may say I am biased because of the business I am in. But I worked for two different county tax assessment departments and I have opinions from that viewpoint also.
