Curt Slyder, writing for the Lafayette Journal & Courier, has an article on property tax relief. At the moment, property tax relief proposals are mostly dead, but such things can generally be resurrected with enough legislative effort.
Everybody’s favorite economist, Larry DeBoer (follow “Capital Comments” link), explains why this is a big issue:
The reasons why property tax reform is on people’s minds go back a few years, said Larry DeBoer, a Purdue University professor of agricultural economics.
The Indiana Supreme Court decided in 1999 that the state’s property tax assessment methods were in need of reform.
“Since then, there have been many changes,” he said.
A reassessment in 2002 shifted property assessment to a market-value basis. In 2006, properties were assessed again to show market value changes since the initial Supreme Court decision.
This year, counties will complete elimination of the business inventory tax, which will shift taxes to homeowners. At a recent meeting of county treasurers, DeBoer predicted residential taxes will go up 15 percent on average this year compared to last.
Those tax bills are due out in the next few weeks and could increase pressure on legislators before the session ends April 29.
Senator Kenley has a plan that consists of three components:
The state would pick up local governments’ share of funding for juvenile incarceration, 100 percent of the child welfare expenses and 100 percent of general fund expenses for public schools.
The State would use money from the property tax replacement fund to pay for the state’s new obligations. So, on the one hand, counties would lose a significant amount of income, but on the other hand, they would lose a significant amount of liability. The state doesn’t necessarily need to rely on property taxes to meet its obligations. Counties are limited by the General Assembly as to their taxing authority and, therefore, they have less flexibility in how they can pay for their obligations.
Reliance on property taxes is problematic. The property has value, but it doesn’t necessarily generate the wealth needed to pay a tax. On the other hand, the taxes are going to come from somewhere. If we shift it to an income tax, are we unfairly adding to the burden of wage earners who own no property while unfairly benefiting owners of large amounts of property? I guess that’s for our elected representatives to decide.