Arizona has the most complicated and complex property tax system in the nation. In basic terms, it is often described as a “share of the pie” system. Taxing districts decide how much they want to spend and then property owners are given a bill for their “share of the pie” based on their property tax classification and assessed valuation.
During an economic downturn when property values plummet, taxing districts collect the same desired amount of property taxes. When politicians make deals with businesses that remove their commercial property from the tax rolls, the taxing districts collect the same desired amount of property taxes. In both situations everyone pays slightly more as their “share of the pie”.
The American Dream Act Arizona eliminates all property taxes on the Arizona primary legal residence of United States citizens over the age of 65. It will remove property from the tax rolls and as a result, the other property owners may have a slight increase in their “share of the pie”. Most will not notice any difference. The taxing districts receive no less tax revenue. The tax levy remains the same. They still collect the same amount and their budgets are not impacted as a result of the American Dream Act Arizona.
Good tax policy generates economic growth and prosperity beneficial to the greatest number of people.
Eliminating property taxes on the primary residences of Arizona seniors will attract home buyers to our state. New housing will be constructed to meet the demand. Local businesses that sell to the home builders will have increased sales. New residents will want more restaurants and tire stores and pharmacies. They will buy cars and homeowners insurance and furnishings for their new home.
This is economic growth and it all generates additional tax revenue. Instead of raising taxes to collect more tax revenue, economic growth does it painlessly and without a rate increase.
States with a net outflow of residents see erosion of their tax base and tax revenue. Then they raise taxes to try to make up the difference which just drives more people and businesses out of the state. The death spiral begins.
When the supply of housing cannot meet demand, the value of your home goes up. Property values for existing home owners will increase.
Texas and Florida eliminated income taxes and the result has been strong economies and population growth. Both states give seniors substantial property tax reductions, no means testing, and Texas recently gave its seniors the option to defer all property taxes indefinitely, again without means testing.
Snow birds may decide to declare Arizona their legal residence to qualify for the property tax exemption. They will start paying income taxes in Arizona instead of their current state. They will pay personal property tax to Arizona when they register their cars in their new home state.
This is all tax revenue Arizona would not see without the enticement of the American Dream Act Arizona, of owning your home without fear of losing it to liens and foreclosure for tax delinquency, of the certainty that you will never be taxed out of your home. The American Dream.