Friday, January 25, 2008

House Passes Daniels Property Tax Plan With Few Changes

While the Indiana Senate spent its day wedge-whacking the gay marriage amendment, the House devoted its time to weightier matters, namely Gov. Mitch Daniels' comprehensive property tax reform package. The House passed HB 1001 on a vote of 93-1, Rep. Craig Fry (D-Mishawaka) was the lone dissenter. It was quite refreshing to see the House work in a bipartisan fasion on an important topic for a change. The Star highlights some of the changes the House made to the Governor's plan. Some are good, while others are really bad. Here's what they changed:

  • Freezing property taxes for Hoosiers 65 and older who earn less than $35,000 per year and whose home is valued at less than $200,000.
  • Reducing the cap for property taxes on agricultural land to 2 percent from 3 percent of assessed value.
  • Doubling the renter's deduction on state income taxes to $5,000 from $2,500.
  • Making referendums apply only to school projects that include recreational facilities such as stadiums and swimming pools.
  • Placing the proposed homestead deduction in Daniels' plan on a sliding scale, giving less relief to owners of higher-priced homes.
  • Increasing the earned income tax credit for the working poor to 9 percent from 6 percent.

The change I most dislike is the big hole Democrats carved out of the referendum requirement on school construction projects. I don't like the idea of placing the homestead deduction on a sliding scale as the value of the home increases. The bill, as amended, also freezes property taxes for some senior citizens. While the overall plan will no doubt lead to lower property taxes, at least in the short run, these types of changes to the property tax system undermine the fairness of a tax which is already unfair. On to the Senate. Let's see what happens there.


Anonymous said...

As I read the amendment on the school bond referendum, only projects that serve no educational purpose and which are over the threshold dollar amount, would be subject to referendum.

So, as long as one classroom was part of the project, no referendum.

The Democrats simply gutted the chance Hoosiers had to have any say in the extravagant spending that schools have been engaged in. I am outraged that they caved into the special interest - aka teacher and administrator associations - and doubly outraged as I am a Democrat.

Anonymous said...

While you're talking about the parts you like least, I'll throw in the sales tax increase. This is a net tax increase for homeowners, if only because you can't deduct this from your federal taxes. A 1 cent sales tax increase to replace property taxes will INCREASE the amount of federal income taxes we pay by $20 MILLION! Dumb, dumb, dumb idea.

I'd guess it's also a huge tax shift from business to renters and homeowners. The numbers show it will shift the tax burden from the wealthy to the poor for sure.

M Theory said...

Gary? Mind if I reprint your analysis on the HFFT blog?

Anonymous said...

Gary, have you heard the rumors that Eric Miller is planning an independent run for Governor?

Gary R. Welsh said...

That's fine, HFFT.

Anonymous said...

Couple groups make out like bandits on this -

Elderly people who live in houses worth $200k. Why would they make the cap more than what the average house is worth ?

Farmers, as usual - the state values farmland at $1100 an acre - any tillable farmland is woirth $4000 an acre.

Anonymous said...

And why don't you like the sliding scale. If some pompous show-off wants to build a 850K plus home or buy one, let em. But they don't need a homestead deduction. If they can afford to build more house than they need, they can afford to pay the taxes on it.

Anonymous said...

Careful, 3:29. None of us really want the legislature or an assessor determining how much house we "need".

I'm ok with an 850 square foot place for myself...but if the legislature agrees that's the "need" for one person, then a couple in a 2200 square foot house has "more than they need".

Anonymous said...

There's a reason ISTA is right across the street from the capitol. Makes it close to go fetch their taxpayer handouts.

Anonymous said...

I didnt necessarily imply I wanted the legislature to determine how much house we need. All I meant was that the vast majority of those who choose to purchase/build homes of that value can certainly deal with the taxes associated. 850k is a ton of money for most of us when it comes to housing and the taxes should reflect that.

Anonymous said...

Politician's should be spending more time on passing Joe Kernan's recommendations to reduce the cost of administering government instead of playing a tax shell game that will only shift tax burden.

As a voter that is what I am watching. They appear to be doing the same old smoke and mirrors tricks.

Looks like we need to vote them all out of office like we did for Bart Peterson.

Anonymous said...

Looks like another quick fix tax gimmick that will be struck down in court because it clearly doesn't comply with the St Joseph ruling that brought this issue to the public's attention.

No lasting tax solution, no government cost cuts means all the bums will be thrown out.