Real property taxes are viewed more favorably by tax experts compared to personal property taxes. While land-based levies correlate roughly with government benefits received, personal property assessments discourage business investment in technology and capital expansion.

For example: if a bank is faced with a decision between building an ATM at a cost of $30,000 per year or hiring a bank teller at $30,500 per year, they should choose to build the ATM. However, additional tangible property taxes would reverse this economically sound choice, leading to inefficient hiring instead.

Business Personal Property Taxes are Complex

These levies impose significant compliance burdens. Unlike real property assessments handled by government assessors, personal property taxes require active business participation through detailed filings including physical descriptions, purchase dates, costs, and serial numbers. New enterprises face the heaviest burden when initially compiling this information.

Reducing Reliance on Business Personal Property Taxes

Solutions include de minimis exemptions (ranging from $500 in Texas to $225,000 in Washington D.C.), filing thresholds for small-capital businesses, exemptions for newly purchased property, and local-option broad exemptions to encourage business competition.

Drenkard concludes that these taxes remain largely unknown publicly while distorting markets with substantial compliance costs, representing reform opportunities for states.