Montgomery County businesses could face a different property tax rate for their commercial land than residents would face for their homes, under a state legislative proposal some fear would discourage companies from operating in the area.
State Del. Al Carr, D-Montgomery, is pushing a bill that would allow Montgomery County Council members to set different property tax rates for commercial and residential properties. Currently both kinds of property are taxed at the same rate.
Carr says the measure would not guarantee a tax increase for either group, but rather give council members the ability to treat homeowners and business owners differently at tax time, as is the case already in the District, and Virginia’s Fairfax and Arlington counties.
“In this decade, there has been a shift in the property tax base away from commercial property and toward homeowners,” Carr said in written testimony about the bill. “However bad things are for commercial property owners, they are worse for county homeowners.”
Local labor unions and the Montgomery County Civic Federation have rushed to support the measure, saying it’s a necessary move to give council members the flexibility to raise revenue after residents approved a ballot referendum this fall that makes it tougher to raise taxes on their homes.
“Voters have made clear the issue of raising taxes on residential property is a real concern,” Tom Israel, executive director of the Montgomery County Education Association, told The Examiner. “This is not a radical concept, it’s already done this way in Northern Virginia and D.C. and it certainly hasn’t affected the business climate there.”
Business leaders, however, say it’s already tough to do business in Montgomery County.
Patrick O’Neil, vice president of economic development for the Bethesda-Chevy Chase Chamber of Commerce, says business owners in the county face impact taxes and regulations not present in neighboring jurisdictions. He also says many people are reeling from last year’s record increase in state taxes, including a so-called “millionaires’ tax” that sets a special income tax rate for people making $1 million or more a year, which he says makes the county unattractive to major companies like Lockheed Martin.
“The state legislators and county council members have this attitude that people will do business in Montgomery County no matter what,” O’Neil said. “First of all, that’s not at all true. If we’ve ever been at a tipping point, this is it.”
