Local governments weigh large tax hikes to fill coronavirus-induced deficits

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Owners, beware.

State and local governments are struggling to raise funds during the economic crisis caused by the coronavirus pandemic seeking to raise property taxes – as well as wealth taxes and more – to fill budget gaps.

The proposals come as officials try to find a balance. The historic job losses caused by the lockups fueled the downturn, which put pressure on city and state budgets. Washington has sought to compensate for this with stimulus payments, additional unemployment benefits, business subsidies and more. Any excessively large tax hike could hurt the economy even more.

But some officials argue that the increases are inevitable.

Property tax rates in Nashville, Tennessee, will rise 34 percent in what Mayor John Cooper described as a “painful but necessary” move that will raise money for the city, which has suffered a blow hard during the pandemic.

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Elsewhere, the debate is raging.

In November, Californians will vote on whether to remove decades-old protections from commercial and industrial properties. Since 1978, tax revaluations of the fair market value of a California property have only been made when the property is sold or there is new construction. Otherwise, valuations are capped at increases of 2% per year. The new measure, if approved, would make exceptions for industrial and non-agricultural commercial goods, which would require them to be revalued at fair market value at least every three years.

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In Chicago, Mayor Lori Lightfoot said property tax increases are “on the table” to help resolve fiscal problems, including a projected deficit of nearly $ 700 million which she says could become even bigger important.

“These are the last choices and tools I want to use, but I can’t get any of them out,” she said.

In Texas, Dallas lawmakers envisioned a massive property tax hike of up to 8%, but the city council needed to take action to raise rates by more than 3.5%. In May, the resolution failed after a vote of 12 votes to 3.

“I want to remove this option from the table,” said Cara Mendelsohn, a city council member, according to the local NBCDFW. “And if we were to pass this resolution and raise taxes even close to that amount, we would create the next disaster for Dallas. ”

Other fields are studying different methods of increasing income, such as wealth taxes. A New York state senator from Queens said in May that “the only people who currently have money are billionaires,” and introduced a bill that would treat capital gains as income and tax unrealized capital gains.

However, this money would not be used for existing programs. Funds raised by raising taxes on billionaires would go to a new “workers rescue fund” that would provide monthly payments of $ 3,300 to people who do not qualify for unemployment benefits or payments under the CARES law.

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Other New York state lawmakers are pushing for income tax hikes for those earning more than $ 5 million.

In Seattle, a new measure approved by city council will add a tax on businesses with at least $ 7 million in annual payroll. The “JumpStart Seattle” tax will tax businesses up to 2.4% on Seattle employees who earn more than $ 150,000. The bill specifically refers to the emergency conditions imposed by the pandemic.

Last week, New Jersey approved a borrowing plan of up to nearly $ 10 billion to fill a massive budget deficit. Republicans warned that this could result in higher property taxes or a wealth tax, while Governor Phil Murphy said that if the state did not borrow, it “would have no choice but to raise property taxes, “according to the NJ. com.

In an interview with The Washington Post on Friday, however, Murphy said taxes could go up further, as the state will likely need “revenue increases” and “everything is on the table.”

Brittany De Lea of ​​Fox Business contributed to this report.

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