If Property Tax is to be altered in some manner, what are the possible concepts that might be considered to change the current system? What are the options? Here are a few:

Proposal Highlight Description

Three methods shift revenue burden to other taxes.

1. Repeal Property Tax and collect the revenue on some other basis.
2. Reduce Property Tax and collect reduced revenue by increasing other taxes.
3. Refund a part of Property Tax for selected segments based upon age and income.

Two more methods introduce more variables to adjust the Property Tax Rate or adjust the True Assessed Property Value.

4. Refine Property Tax: Tax Land and Improvements at separate rates.
5. Revise Property Tax to introduce other factors or combination of factors:

One scenario would be to use Factors to reduce or increase a Payer's Property Tax:

1. A factor (F1) for age of Property Owner.
2. A factor (F2) for years of Property Ownership.
3. A factor (F3) for Household Gross Income (HGI) compared to Median HGI
4. A factor (F4) for True Assessed Property Value (TAPV) vs Median TAPV.

Note: Several methods to combine Factors can be devised; simple averaging weights them equally. The individual factors might be functions like those illustrated below:

If All factors are combined by averaging, then:
CF = ((F1+F2+F3+F4)/4) , which would result in a modification to a given taxpayers rate as follows:

where GTR = [100*(Total " " Cost) / (Total " " TAPV )] or the Rates/$100.

yielding: Payer's Tax = CF x ((Payers TAPV) x GTR ,

Though this list of five methods is not exhaustive, it indicates that several options are available. The Public Forum on Property Tax proposes to explore the merits of any of these or other proposals that are advocated to restore an effective funding on an equitable basis.

Governor Whitman's 1998 Property Tax Commission considered Proposals 1, 2, and 3. Though they offered no concrete proposal, Proposal 1 was considered by transferring all costs to either Income or to Sales Tax. It was suggested that neither of these extremes was practical. Proposal 3 was challenged and rejected as an undesirable alternative. There are several intermediate versions of Proposal 2 that were not cited, but could be a basis of a reduction in Property Tax.

The 1988 SLERP Commission report to Governor Kean's considered Proposals 2, and 3 and stressed Proposal 3 combined with aspects of Proposal 5 B and C. This report examined and considered the undesirable state of affairs and listed several proposals for action and review.

State of Michigan's Approach to Property Tax Policy