Baltimore is one of only three large cities in the United States where the disparity between residential and business property taxes is so great that homeowners are, in effect, subsidizing commercial enterprises. That's a recent finding of the National Taxpayers Conference. But we didn't need their report to know that city residents are being chased out of their homes by taxes - and that underassessment of the commercial sector is a big part of the problem.
Finally, there may be hope for those of us who have studied the huge gap in residential and commercial property tax rates in the city and for those who are just plain angry about the unfair burden placed on city homeowners. Today at 4 p.m., the City Council's new Special Committee on Property Tax Relief will hold its first public hearing. The stated focus of the hearing will be the lack of action on the recommendations of the Mayor's Blue Ribbon Committee on Taxes and Fees.
While we support the work of this committee, we call into question the report's failure to recognize the commercial-homestead disparity in Baltimore. In fact, what the panel proposes would make things worse by raising the homestead cap to 10 percent and increasing personal income taxes so that the lion's share of the benefits would go to commercial property holders.
The Abell Foundation highlighted the assessment disparity in its November 2004 report: "Commercial Property Assessments in Baltimore: A Costly Problem - A Strategic Opportunity." This excellent report was resoundingly ignored when presented to the City Council.
According to the U.S. Census, owner-occupancy in Baltimore dropped 7.8 percent from 2000 to 2006. During the same period, the nation was experiencing an urban residential boon; Washington, for example, saw owner-occupancy increase nearly 12 percent. The homeowner property tax rate in D.C. is 0.85 percent of assessed value, while here it is a crippling 2.268 percent.
In a recently published study in the Daily Record, KPMG International ranked Baltimore as having the most favorable business tax environment of all large cities in the continental U.S. But that is only half of the story. The "50-State Property Tax Comparison Study" by the National Taxpayers Conference in April ranks Baltimore at the bottom of the largest cities in each state when comparing commercial tax rates to homestead property tax rates.
