An e-mail from Aaron Smith, Watchdog Indiana, sent October 23, 2010:

Hello Watchdogs,

Voters statewide have the opportunity on November 2 to pass Public Question #1 to amend the Indiana Constitution to (1) make the 1% – 2% – 3% property tax caps permanent and (2) protect homeowner property tax deductions from legal challenge. Taxpayer UNfriendly opponents of Public Question #1 consistently repeat three half-truths to deceive voters.

One half-truth is caps are useless because they are based on poorly controlled property tax assessments. It is true that caps can increase and decrease as gross assessed values go up and down. However, local governments cannot arbitrarily set assessed values.

For Pay 2010 property taxes, homeowner assessments were established on March 1, 2009, by using market values from neighborhood sales made in 2007 and 2008. A taxpayer who questions an assessment can request a preliminary informal meeting with the assessor before deciding to appeal. In spite of currently declining home values, property tax assessments will likely creep up over time while the permanent caps in Public Question #1 will keep homeowner property taxes from leaping up.

A second half-truth is caps benefit the wealthy because higher-value homes reach the 1% cap before lower-value homes. This occurs because the standard and supplemental homestead deductions benefit lower-value homes more than higher-value homes. A complete caps analysis shows higher-value homes at their 1% cap pay proportionally more per dollar of assessed value in property taxes until lower-valued homes reach their 1% cap. The whole truth is that the combined operation of the 1% cap and homestead deductions benefit lower-income homeowners because higher-income homeowners bear a proportionally higher share of the total property tax burden.

The third half-truth is the “drastic” step of amending the state constitution makes no sense because so few homeowners are at the 1% cap. For Pay 2010 (excluding high-tax Lake and LaPorte counties because of incomplete data), 10.5% of homes statewide have a property tax bill that is greater than 1% of gross assessed value. The whole truth hidden by Public Question #1 opponents is that 56.2% of homesteads statewide had a Pay 2007 property tax bill that was greater than the 1% cap. The Constitutional Amendment will permanently protect the majority of Hoosier working families from again having a future property tax burden greater than 1% of gross assessed value. Even for those working families whose property tax burden is less than the 1% cap, Public Question #1 is like an “insurance policy” that provides predictability and assurance that property taxes do not become an unaffordable burden.

Maintaining homestead property tax deductions are just as important as permanently capping property taxes. It has been largely overlooked how Public Question #1 protects from legal challenge the various homestead deductions passed by the General Assembly.

The General Assembly will have free reign to continuously tinker with the caps if Public Question #1 does NOT pass, and concerned entities will sue to have the current legislative-only caps declared unconstitutional to keep more of the property tax burden from being shifted to them. The courts are likely to declare unconstitutional both the property tax caps AND all the homeowner property tax deductions because they conflict with the current Indiana Constitution requirement for a “uniform and equal rate of property assessment and taxation.”

Public Question #1 must be passed to not only make the property tax caps permanent, but also prevent a homeowner property tax explosion by protecting homeowner property tax deductions from legal challenge. Informed voters need to ignore the half-truths of taxpayer unfriendly opponents and vote YES for Public Question #1 on November 2.

This E-mail Update is the twentieth installment of Watchdog Indiana’s Top Twenty Reasons to support the Constitutional Amendment. An E-mail Update has been sent periodically with a full discussion of a different reason to support the Constitutional Amendment. Complete information for all the Top Twenty Reasons to support the Constitutional Amendment can be found at https://www.finplaneducation.net/caps_top_twenty.htm. This web page can also be used to access the following additional information: (a) the text of the Constitutional Amendment Public Question #1 that will appear on the November 2 ballot; (b) the complete text of the Constitutional Amendment legal language; (c) a digest explanation of the Constitutional Amendment; (d) nonpartisan information from the Indiana Legislative Services Agency on how the property tax caps and 2008 property tax reform program will affect the tax burden of local working families and businesses, local school revenues, and the revenues of other local government units.

As the leading citizen advocate for the Constitutional Amendment, Watchdog Indiana is available to attend any public meeting or debate, anywhere, at any time.

Watchdog Indiana is a non-profit, non-connected, and non-party advocate for good government that focuses on the state and local tax burden of Hoosier working families. An online community is established where Hoosiers come together voluntarily to help encourage our state and local governments better respond to the needs of working families. Watchdog Indiana was established November 14, 2001, and the Watchdog Indiana website.

This is Watchdog Indiana E-mail Update #161-102310, and it was sent to Hoosiers in 73 counties.

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