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New Hampshire is often said to have one of the highest property tax burdens in the United
States, if not the highest. But, is it as high as you think? The most common measures of the
property tax burden are property taxes per capita and property taxes per $1,000 in personal
income. Using these measures, in 2005 New Hampshire had the third-largest per capita
property tax burden of any state, and the highest property tax burden as a share of
personal income.
However, these measures are misleading. In both cases, the property tax base includes a
number of factors that skew these calculations and make property taxes look higher than
they are. These include the following:
• property taxes on commercial, industrial, and utility-
owned properties
• property taxes on farms and vacant land
• taxes on personal property, such as automobiles,
boats, bank accounts, stocks, and
bonds
• property taxes on second homes owned by non-
residents.
States such as New Hampshire, with a higher proportion of second homes than other
states, are especially impacted by this last factor, and will show erroneously high property
tax burdens, since non-residents are not counted in per capita or income measurements.
New Hampshire has the third highest percentage of second homes in the country, over three times
the U.S. average.
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With commercial, industrial and utility property, an issue arises in determining how much
of the tax cost is passed on to non-resident customers, employees or shareholders; a state
with a high-percentage of such property, the owners of which pass their expenses on to out-of-state
customers, will appear to have a higher property tax burden than it really does.
Apples & Oranges
The traditional measures of property tax burden (per capita and personal
income) are misleading because they mix apples and oranges. Neither
population nor personal income is directly related to the actual base of the
property tax, assessed value of property. |
A Better Way to Measure: Effective Tax Rates
A more appropriate measure of property tax burdens is known as an “effective tax rate,”
which compares property taxes to the market value of the property. One such assessment,
conducted annually by the Minnesota Taxpayers Association, examines four property
types—residential homesteads, apartments, commercial property, and industrial
property—in the largest urban area of each state. These measures reveal that for New
Hampshire residents living in homes or apartments, New Hampshire ranks from thirteenth
(13th) to twenty-ninth (29th) among the states.
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View Full Report
by Daphne Kenyonand Michael E. Bell, Ph.D.
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