35% Increase In Local Income Tax Hits Allen County Taxpayers Tomorrow

Allen County taxpayers will see a cut in their pay starting tomorrow thanks to a 35% increase in the local option income tax hoisted on them by the city of Fort Wayne, which controls the Allen Co. Income Tax Council, after it approved increasing the local tax rate from 1% to 1.35% to close a budget gap in Fort Wayne's budget. Like Indianapolis, Fort Wayne diverts a substantial amount of property tax revenues to TIF slush funds that are used by the city's mayor to reward campaign contributors, which are described to taxpayers as investments in economic development. The Fort Wayne Journal-Gazette explains the less-than-transparent mechanism Fort Wayne used to raise taxes on all county taxpayers under state law.

So how did the Fort Wayne City Council manage to raise taxes on everyone in the county, even those outside the city limits? Technically, it didn’t – the Allen County Income Tax Council did.

The Allen County Income Tax Council is in some ways a myth, as it never meets. Instead, it is made up of the governments of the county and incorporated towns, and each year, Allen County Auditor Tera Klutz calculates, based on population, the number of votes that each body gets.

The city of Fort Wayne gets 71 votes out of the 100 available. Allen County government gets 21, New Haven gets 4 votes, Huntertown gets 1.35 and Leo-Cedarville gets 1 vote. Woodburn, Monroeville, Grabill and Zanesville each get less than 1 vote.

That’s not the case in all of Indiana’s 92 counties: In 27 counties – including Adams, Kosciusko and Steuben – the county government holds the majority on the tax council. In 16 counties – including DeKalb and Huntington – no single entity holds a majority, meaning coalitions must form to pass anything.

But in Allen County, when the Fort Wayne City Council voted to raise the LOIT, the measure automatically passed with at least 71 of 100 votes. Klutz then sent letters to each of the other bodies asking them to cast their own votes.

These laws are written by the big law firms that have full-time lobbyists at the State House taking advantage of lawmakers who aren't smart enough to know better, or who enjoy too much the free tickets to sporting events and the meals at St. Elmo's purchased for them by their lobbyists to ask any questions. The big law firms, of course, love slush funds that can be used for bonding purposes to fund these economic development opportunities for which they provide the professional services and the proceeds of which quite often conveniently benefit clients they represent. Dishonest mayors and city council members will tell their constituents that they have no choice but to raise their income taxes because they're losing too much money because of the state's property tax cap law.