The Michigan Circuit Breaker and its Impact on the Incidence of the Property Tax

A bstract . In the absence of any program of property tax relief , the relationship between homestead property values and household incomes in Michigan introduces an inherent bias towards regressivity into the property tax. Analysis of a sample of 15,620 owner-occupied households showed a tax relief program, called the Michigan Circuit Breaker , and in particular the special relief afforded to taxpayers 65 and over ( senior citizens ), to be highly effective in reducing this inherent regressivity in the tax. As a result of the circuit breaker, this tendency towards regressivity in the property tax is effectively offset to the extent of producing near proportionality in the incidence of the tax as applied to owner-occupied housing.