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Monday, August 27, 2007

Ind. Law - "In Indiana, it's war on property tax"

The LA Times today picks up on the Indiana property tax brouhaha/scandal/mess.

P.J. Huffstutter reports, in a lengthy story datelined Indianapolis:

Indiana homeowners are waging war against a system they see as inconsistent and unfair. Many politicians agree with their view. Property tax revenue traditionally helps fund local governments, which set the amounts and help distribute the money to local entities that provide services.

In Indiana, state officials said, there are about 1,000 local township assessors. These elected officials are responsible for, among other tasks, evaluating a property's worth and sending that information on to the state's 92 county assessors, who use the assessments to help set the property tax bills.

State law requires that assessments be based partly on a property's market value, how much it could be sold for. But not all assessors follow state guidelines on how local tax assessments should be conducted -- or are even formally trained to do the job in the first place, said Gov. Mitch Daniels.

"As a result, the process can be unfair," Daniels said in a recent interview. "The local assessments are in some cases outright botched." * * *

"No one understands how the government's figured out how much their property is worth, or why their tax bill is so high. Especially when a neighbor across the street, with the exact same floor plan, has a bill that's half the price," said Melyssa Donaghy of Indianapolis, an activist against property taxes.

But it's not so much the size of the bills that has sparked the public backlash, said D. Eric Schansberg, a professor of economics at Indiana University Southeast in New Albany.

"It's the unpredictability -- of what the assessments are, of what the tax bill's going to be, of how the system even works in the first place -- that gets to people," said Schansberg, who tracks economic issues in the state.

[More] Niki Kelly of the Fort Wayne Journal Gazette writes today about options to the property tax, in a story that begins:
It’s easy to say get rid of property taxes. The hard part is choosing what tax to increase to replace the lost revenue.

Basically, Indiana has the big three – sales, income and property tax.

A brief by the Indiana Fiscal Policy Institute shows that property taxes account for about 31.2 percent of all state and local tax revenue – a percentage that many insiders say is out of balance.

To reduce one, another has to go up. Or does it?

Some Hoosiers are pushing officials to think outside the box.

For instance, Indiana is one of only six states that do not have a graduated income tax – instead charging one state rate to all taxpayers regardless of income. Other states have reaped hundreds of millions in new tax revenue by broadening the base and charging a state sales tax on services.

And some on the federal level – as well as angry Hoosiers – are pushing for a more radical shift to a pure consumption tax only.

“I think everything – even those options I don’t think much of – ought to be on the table,” Gov. Mitch Daniels said. “The urgent need is to reduce property taxes. We’ve talked about it for a long time and now trends and decisions made years ago are all coming together to make this an urgent matter, and in that situation I don’t think you exclude very many options out of hand.”

And of course if the property tax remains in any form, its inequities also must be addressed.

Posted by Marcia Oddi on August 27, 2007 09:36 AM
Posted to Indiana Law