it’s a cautious dance trying to find the balance between maximizing local revenues and squeezing too much out of property owners. Too much of a burden on homeowners can cause backlash, while a hefty levy on business owners can stifle commercial growth or trigger an exodus.
The vast majority of Massachusetts cities and towns have a flat rate for residential, commercial, and industrial properties. But since Proposition 2½ was passed in 1980, 106 communities have instituted a differentiated tax rate that shifts more of the tax burden onto business.
The formula for the Commercial, Industrial and Personal Property shift (called CIP by the Revenue Department) is mind-numbing, but basically allows communities to levy on businesses a property tax rate of up to 150 percent of what a flat rate would be. Some urban and older industrial communities can levy up to 175 percent of the flat rate.
Revenue Department records indicate the shift ranges from 103 percent of what the flat rate would be in Hanover to 175 percent in 54 communities. Some of the 54 communities have lots of businesses, while others have very few. They range from Boston to Swampscott to Worcester. Only Barnstable and Winchester, because of some assessing anomalies, have a higher residential rate than businesses.
Municipal officials who have increased the tax burden on businesses say they are mindful of what they can ask businesses to pay without pricing them out of town. “That is always part of the discussion,” says Richard d’Ambly, chief assessor in Milton, where businesses last year paid $20.44 per $1,000 of assessed value compared to the residential rate of $13.35.
The shift can mean hundreds of dollars off the average residential taxpayer’s annual tax bill. “I live in Raynham and my tax bill actually went down one year because of it,” says d’Ambly.
But the shift isn’t for everyone. Westborough, with a prime location at the junctures of I-495, Route 9, and the Mass Pike, has nearly 40 percent of its total assessed value in CIP but levies a single tax rate of $16.98.
Source: Massachusetts Department of Revenue, Division of Local Services. FY2010
