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Business property taxes match state income tax burden.

CPAs looking for ways to reduce corporate client taxes should not overlook property levies. According to a Coopers & Lybrand survey of 348 large companies across the United States, property taxes were almost as costly as state and local income taxes.

Of the companies' total state tax burden, income taxes represented 38%; real property taxes, 22%; personal property taxes, 15%; sales and use taxes, 16%; and capitalbased franchise taxes, 9%. Thus, total property taxes of 37% were almost equal to the 38% paid in income taxes.

Dennis Neilson, C&L director of property tax services, said, "Because property taxes are often administered and paid locally and are usually not centrally controlled, they can be difficult to determine for many companies. For that reason, many companies may be missing opportunities to reduce these taxes."

Also, Neilson believes many manufacturers minimize property tax costs by considering only real property taxes. In reality, they may find that personal property taxes on equipment and inventory add up to a higher percentage of property tax costs than real property taxes.
COPYRIGHT 1992 American Institute of CPA's
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Nov 1, 1992
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