Niki Kelly has an article on the property tax debate before the Senate Rules and Legislative Procedures committee. A new wrinkle is the idea of eliminating property taxes on homesteads only – leaving farms and businesses subject to the tax. Self-promoter Eric Miller was there to present his plan which would require jacking up the sales tax to 9.4% or the income tax to 13.5% or some combination thereof. Miller claims the increases would be less, but his numbers aren’t very well defined and don’t seem to add up — see, e.g., an unidentified business tax increase of about $1 billion and “administrative savings.” Under his plan, business share of the tax burden would drop from about 33% currently to about 19.9%.
Let’s just drop the property tax elimination crap. It’s not going to work. There is no compelling reason for such dramatic increases in other sorts of taxes just to eliminate property taxes. It amounts to a substantial tax shift without a substantial justification. There is a contingent out there who want to threaten to hold their breath until the General Assembly agrees to property tax elimination. Some figure to use such threats as a negotiating stance, hoping to leverage a more favorable outcome. The legislature should tell those folks to go pound sand and shut them out of the debate. If they won’t negotiate in good faith, they shouldn’t have a place at the table. If the General Assembly manages to reduce property taxes enough, the average Hoosier isn’t going to give a hoot for these zealots and, with some luck, they’ll be rightfully marginalized.
Here is the basic template:
Step One – Require that all state mandated expenses be paid from the state general fund.
Step Two – Pare down local government as reasonably necessary and possible.
Step Three – Consider reinstating the inventory tax.
Step Four – Raise local income taxes modestly.
Step Five – Raise sales taxes modestly.
Step Six – Reduce property taxes.
In addition, the General Assembly should consider seeing whether property tax spikes were far higher in some localities than in others. Targeted action would be appropriate in those cases. For example, if Marion County’s property tax increases were a lot higher than the average county, maybe Marion County’s income tax needs to be raised higher.