NFIB

In NFIB's most recent Problems and Priorities survey, property taxes ranked as the fourth most critical problem for small business owners, up from sixth in 2004. Because most small business owners pay property taxes on their home, business or both, spiking property tax rates put a damper on their ability to expand their business.

According to the Problems and Priorities report released in June, 25 percent of the small business owners surveyed indicated property taxes (real, inventory or personal property) are a critical problem. Because a majority of small business owners are homeowners, and 47 percent of small business owners whose business is located outside their home also own the building in which their business is located, property taxes can have a devastating impact on entrepreneurs' ability to grow their company.

Until recently, property values were increasing sharply in many areas of the country, which, while good for the overall value of assets, meant small business owners were hit with higher property taxes. Small business owners are also often taxed on the assessed value of personal property, such as vehicles, business inventory and financial assets, which adds to the total tax burden. According to the survey, while the incidence of personal property taxes has declined some over the years, the problems they present for small business owners persist.

Property taxes in the states
NFIB opposes the increase in property taxes on small business owners, and continues to fight for solutions in the states so that you can grow your business and create more jobs. The following are states that have been dealing with property tax legislation this year:

Arizona
Though the House and Senate approved it, the governor vetoed H.B. 2220, the State Equalization Property Tax Permanent Repeal, which would have made permanent the three-year suspension of the state equalization assistance property tax, set to expire in 2009. NFIB supported this measure, as well as its companion bill, S.B. 1002, because without an extension of the permanent repeal, property owners will be hit by this tax again.

The Arizona legislature failed to move any of the measures proposed on business personal property tax. The proposal would have allowed the 2008 general election ballot to ask voters whether to increase the exemption on the property tax levied on business personal property to the first $1 million in value, up from the first $50,000 in value. NFIB supported increasing the exempted amount.

Indiana
Indiana has placed the issue of property taxes on its 2008 legislative agenda, and lawmakers are considering various proposals, including one that would provide local governments with more options for generating revenue. A recent survey of NFIB/Indiana members confirmed that 74 percent of residents oppose legislation that would provide the local governments with more options to tax them.

New York
NFIB and New York small business owners currently are supporting a property tax cap in the state, as New Yorkers pay the highest property taxes in the nation and property taxes are the largest tax on business in the state. Local property taxes increased 42 percent from 2000 to 2005--more than three times the rate of inflation. And despite an increase in state school aid in recent years, property taxes continue to increase and are 79 percent higher than the national average. Gov. David Paterson has accepted the report from the New York State Property Tax Commission, which recommends a cap on property tax increases and proposes legislation to impose a cap. NFIB/New York urges the Legislature to act on this proposal and provide relief to New York's small business owners.

What you can do
Contact your legislators and ask them to oppose property tax increases on your small business. Remind them that small business is the No. 1 job creator in the country, and the fallout small businesses experience from exorbitant taxation is passed on to their employees, customers and the economy as a whole. 

NFIB will continue to take an in-depth look at the top five problems indicated by the Problems and Priorities survey, available at NFIB.com/research. Stay tuned for more information on the fifth problem, tax complexity.