Property Tax Caps help make Indiana’s Tax Code more modern, more fair

An e-mail from Republican Indiana Senators David Long (16th) and Tom Wyss (15th):

Property Tax Caps Help Make Indiana’s Tax Code More Modern, More Fair

(INDIANAPOLIS – October 27, 2010) – Hoosiers voting in next Tuesday’s General Election have an historic opportunity to make Indiana’s tax system more modern and more fair.

Ballot Question 1, which follows selections for federal, state and local offices, asks if voters support or oppose protecting Indiana’s property tax caps by adding them to our state constitution- away from whims of free-spending politicians and special interests.

Property taxes are an antiquated way local government has been funded since the Civil War, when agricultural property equated to personal income. Today, property ownership has less to do with a taxpayer’s income or ability to pay. It is unfair seniors are taxed on unrealized appreciation and young homeowners are taxed on the full value of assets in which they have little to no equity. Seniors and young families should make certain they go to the polls and vote “yes” on Question 1.

Property taxes are incorrectly touted as being more “stable” than income and sales taxes, which fall during recessionary times. In reality, property taxes are stable only for tax spenders, not tax payers. Despite hard times, records show property taxes have historically risen year after year and generally far outpaced inflation. Government should constantly seek new, more efficient ways of delivering needed goods and services, but especially during economic downturns. Indiana’s tax caps are requiring local governments to cut waste, set priorities and combine efforts – actions most Hoosiers say should have been done all along.

Neither K-12 education nor public safety need be negatively impacted by placing the caps into our Indiana Constitution. School operations are funded through state general funds, not property taxes. Complaints of tax caps causing teacher layoffs and program cuts are ill-informed. Under Indiana law, districts desiring additional local revenue for building construction and maintenance may pursue funds through referenda considered by local voters and taxpayers. Public safety may be funded through a more modern and fair Local Option Income Tax, again decided county-by-county based on local needs and wants.

Indiana’s caps – already in law and passed by wide, bipartisan majorities – limit property taxes on homes at 1 percent of the assessed value, on farmland and rental property at 2 percent and other businesses at 3 percent. Farms, rental and other business properties are classified differently, because they are by definition income-producing. Most Indiana farmers and business owners also own homes and enjoy the 1 percent cap on their owner-occupied homesteads. Farmland is assessed based on different uses of the acreage with the highest of a six-year rolling average disregarded for tax purposes. Indiana businesses are benefitting greatly from the recent elimination of the state inventory tax and pay little to no sales taxes, which fund property tax relief and replacement. Consequently, each class of property owners is treated in like ways as already prescribed by our Indiana Constitution.

Recently releases figures showed the positive impact tax caps are having for Indiana homeowners, farmers, landlords and businesses. In 2010 alone, tax caps saved Indiana property taxpayers nearly $475 million. What’s more, a Ball State University study recently projected the predictability caps provide entrepreneurs and employers will lead to as many as 97,000 new jobs for Hoosiers in years to come.

While other states are raising taxes, Indiana is actually controlling and cutting them… and creating long-term economic growth. Join me in making Indiana’s tax code more modern and more fair. Vote “yes” on Question 1.

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