SB573, which was heard on Wednesday February 27th in the Senate Budget and Tax Committee, seeks to provide counties with greater flexibility in setting their personal property tax rate. Currently, the personal property tax must be set at 2.5 times the rate for real property. This means that every time the real property tax rate increases, the personal property rate will also increase. From MACo’s testimony on the bill:
MACo believes this legislation is pro-business and will promote economic development. Decoupling the personal property tax rate from the real property tax rate would allow counties to incentivize business investment using a deliberate approach rather than one that is lock-step with the more general real property tax rate.
Should this legislation pass, the personal property tax rate would be set at NO MORE than 2.5 times the rate for real property.
Others offered support for the bill. From the Maryland Chamber of Commerce testimony:
In the past few years, we have seen that some Counties have needed to increase the real property tax rate but have been resistant because of the automatic increase to the personal property tax rate, which would adversely affect businesses in the County. By making a very straightforward and simple change to the State statue, this bill would allow those counties the needed flexibility to increase their real property without the fear of inflicting undue economic hardship on their business community.
The Apartment and Office Building Association of Metropolitan Washington (AOBA) also offered support.
AOBA supports this bill because it allows counties to reduce the rate of business personal property taxation independent of the real property tax rate, thereby encouraging businesses to increase investment in equipment and promote job growth.