Commerical Industrial Personal Property (CIP) Taxes and Shift by Town
Massachusetts municipalities may shift tax burden onto commercial and industrial properties by setting a CIP shift factor, which is a ratio between commercial, industrial, and personal (CIP) property tax rates and residential tax rates. Communities with a CIP shift of 1.0 tax all property at the same rate, while communities with higher rates, today some as high as 1.75, tax CIP property at considerably higher rates than residential property. In some cases, CIP property may be taxed at rates exceeding 2.5% (the magic number associated with Proposition 2 1/2.)
Many small communities set their CIP shift at 1.0, in which case commercial tax rates are the same as residential tax rates. Examples are Arlington, Chatham, Williamstown, Newburyport.
Other communities set their CIP shift at higher rates. In some cases, communities are limited to a maximum shift of 1.5; while in some the maximum is 1.75. Finally, some communities have maximum shifts which are slightly different from these two figures.
These first two charts show the CIP shift elected by each town and the maximum permissible. Towns which are well below their maximum CIP shift, such as those set at 1.0, could decrease residential tax burden by shifting to businesses. However, for towns at maximum CIP shift, no further burden shift can occur.
The two final charts show why this matters, showing the % of local property tax paid by CIP v. R/O.
CIP=Commerical, Industrial, and Personal Property
R/O=Residential and Open Space (typically residential space is all or the majority of R/O).
If a municipality is already at the maximum CIP shift, then a town could elect to shift taxes back to residents; however, this might seem unlikely since residents vote. Barring that active decision, the town could maintain the maximum CIP shift. However, as reassessment of properties occurs each year, if residential properties inflate more than commercial properties, the residences will find themselves with an increasing % of tax burden and no ability to obtain further relief by shifting taxation to CIP properties.