The ramifications of the library tax
November 3, 2012
Regardless of how I feel about the proposed library expansion, when voting for the library expansion (or not) I think it’s important to consider the tax implications for local businesses. In Aspen and most resorts, landlords pass on the property-tax bill to their tenants in the form of what is called a “triple net” lease. This is something that is upfront when a lease is signed and hopefully taken into consideration when a tenant signs a lease.
When a new tax is introduced, like the library expansion, everyone is informed via advertising, etc., that the result is X among of dollars per $100,000 or $1 million home valuation. What is always left out is the impact on the commercial segment of the town (or county in this case). The TABOR and Gallagher Amendment changed how the allocation of tax collection would be allocated to the residential properties versus the commercial properties.
It’s worth considering an example. In order to calculate the residential property tax on a $100,000 home, multiply the value of the home by the current Colorado residential assessment rate (7.96 percent), which yields $7,960, and then again by the mill levy. Using a mill levy of 100 mills (for this example), the total tax liability for a $100,000 home is $796.
Commercial-property tax is determined using the same formula with an assessment rate of 29 percent. If a $100,000 home were instead a commercial property, the total property tax liability would be $2,900 (100 mills times $29,000).
This equates to the commercial properties being taxed at 3.64 times the residential properties.
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These property-tax increases are incredibly hard on local businesses. I know we all want our town, county, state and federal government to supply us with all the great things in life, but they all come at a cost.
So make sure that when you vote for this tax and any other property-tax increase, you realize the ramifications on everyone.