This article about proposals to engrave property tax caps into the Indiana Constitution by Lesley Stedman Weidenbener is fine, but the headline is just awful: “Indiana GOP wants tax caps formalized.”
The property tax caps are already part of the Indiana Code. That’s pretty darn formal, not just some handshake agreement or something scrawled on a napkin somewhere. The critical distinction between the Republicans and the Democrats on this issue isn’t formal versus informal as the headline suggests. It’s whether the property tax formulation developed last year is a good idea for the circumstances we currently face or whether it’s some sort of eternal verity. Democrats think the property tax caps at the rate of 1% of assessed value for owner-occupied residential real property, 2% for farmers, and 3% for businesses are a good idea for the foreseeable future; Republicans apparently think this particular formula will be a good idea forever.
The headline’s frame that suggests a law isn’t formal unless it’s part of the Indiana Constitution is pernicious. It suggests the current property tax caps can be changed on a whim rather than requiring the vote of a majority of Indiana’s elected representatives and the approval of the Governor.
Why is this even an issue. To eliminate flexibility by writing it into our Constitution is short-sighted at best. The supporters know they will not be around when we have 22% sales tax to cover the prop shortfall.
I read that 14 other states have caps in the Constitution. Is this true? If so, I wonder if they are as restrictive as the proposed here. And, if so, what are the unintended consequences of those caps. Hmmmmmmm….
I’m sure I sound glib and partisan,but isn’t the philosphy of conservative republicans to enact legislation ‘they believe in ‘and will be in effect for next 1000 years? If conditions change then we all adjust to ‘what’s right’. It’s not just in Indiana,but everywhere. Flexibilty is liberalism.
Beware of messiahs who have another vision.
Doesn’t the Constitution require that all property be taxed equally? I think that was the whole point of the Supreme Court case and why Indiana had to move to a fair market type system for assessing property.
Because of that constitutional provision, I would think you would need to change the constitution to implement the 1-2-3 cap. In fact, I’m not sure how the law is constituional unless the Constitution is amended.
As I read Art. 10, sec. 1, treating residential property differently is probably permissible but a distinction between farm and other business property might well run into problems. The Constitutional provision is:
The part that makes me think that residential property might be o.k. for special treatment is the part that says:
So Doug, does this mean that vacation homes could be taxed at a different rate than primary residences?
The part of this that really gets me is that Mitch wants agriculture to help lead Indiana out of the recession, but taxes farmland at a higher percent than homes. So does this not cause the conversion of farmland into subdivisions?
SJR 1 is located here. Under that provision, the taxes on a person’s principal place of residence is capped at 1% of assessed value. Other residential property (e.g. rental properties) and agricultural land is capped at 2% of assessed value. Other real property and personal property tax liability is capped at 3% of assessed value.
Oh, and I sure would be more comfortable if the proposed constitutional amendment specified that the caps were an *annual* tax cap. I don’t think it specifies any time period — so theoretically could (I suppose) apply to daily tax liability or lifetime tax liability.
Larry, it absolutely does mean that. Otherwise, the homestead exemption would be unconstitutional.
Doug, thanks for the clarification. However, even if residential property could be treated differently within the class, that doesn’t address what is the different tax treatment of the three classes of property, which doesn’t appear to be constitutional. I still don’t see how the 1-2-3 statute is constitutional without the constitutional amendment. Maybe I’m missing something here. Wouldn’t be the first time.