Resolution in Support of Non-Discriminatory Property Tax Policies

Resolution in Support of Non-Discriminatory Property Tax Policies

WHEREAS, American consumers have come to rely on high speed communications networks constructed by communications providers to improve their overall quality of life including in the areas of healthcare, education, business, emergency services, and other purposes; and

WHEREAS, communications providers must make sizeable investments to keep pace with consumer demand for better coverage and higher bandwidth; and

WHEREAS, a 2006 study by Ernst & Young shows that state property tax policies result in communications companies facing disproportionately higher property tax burdens than other businesses because of their legacy treatment as a regulated public utility in some states; and

WHEREAS, the payment of discriminatory property taxes by communications companies that would otherwise be spent on network investment diverts money to taxes and lessens the effectiveness and reach of critical infrastructure deployment; and

WHEREAS, studies show the private sector investment in communications infrastructure results in important economic benefits to states; and

WHEREAS, property taxes are typically imposed on the “fair market value” of property by looking at the price an informed, willing buyer would pay a willing seller but some states deviate from this principle by (1) assessing telecommunications providers on the value of their intangible assets, (2) applying assessment ratios that result in taxation of a higher percentage of fair market value compared to other general businesses, and (3) defining the personal property of telecommunications providers as “real property” so that it is taxable in states that do not tax personal property; and

WHEREAS, new communications network investment generated by lower property taxes will generate additional tax revenues to offset some of the revenue reduction from eliminating the discriminatory treatment of communications providers; and

WHEREAS, recent reforms in some states have excluded the value of intangible property acquired on a going-forward basis or eliminated the taxation of intangible property for all taxpayers, including telecommunications companies; and

WHEREAS, the American Legislative Exchange Council supports the policy of eliminating discrimination in the administration of property taxes on communications companies across all states, including rural and underserved areas, and encourages states to modernize their antiquated property tax systems; and

NOW THEREFORE BE IT RESOLVED, that the American Legislative Exchange Council recommends that states who wish to encourage investment in critical communications networks consider eliminating the discriminatory taxation of that property.