I assume the vote to carve the current property tax structure into the Constitution for future generations is a done deal, so I haven’t said much about it lately. I’m against it. We’re starting to see some problems with structured tax caps of 1% for residential property, 2% for non-residential rental property and agricultural property, and 3% for anything else – mostly business. But, good policy or bad policy, we’re looking to lock them in, removing flexibility for future generations when conditions change.
John Seidel of the Post-Tribune has a good article summarizing the current state of the tax cap situation. Abdul argues that because the General Assembly didn’t eliminate townships, future generations deserve to be hamstrung with respect to funding local government services. Or something.
Morton Marcus, meanwhile, argues against Constitutionalizing the tax caps. Rather than more government efficiency, the caps will likely result in deteriorating local services. The county option income tax the General Assembly provided as a replacement option isn’t all that great. Among other things, it allows only a tax on households and not business. This is just further degradation of local control; more and more local decisions have to run through Indianapolis. Marcus traces this back at least to 1973.
As far back as the property tax reforms of 1973, Indiana degraded local government and shifted power to state government. The legislature has increased its control of our schools. Cities and towns have become prisoners of the state in the tax wars. Libraries have been forced to defend their very existence.
Finally, the benefits of the caps are primarily enjoyed by owners of small rental housing units, commercial apartments and second homes (60%) with about 36% going to commercial and industrial properties. Only about 4% of existing cap benefits go to homeowners.
Marcus has the better argument, but Abdul’s side is going to win the day. Voters aren’t well informed about local government financing. They just hear “tax caps” and think, “yippee!”
Our experiment in self-government isn’t going very well. You are absolutely right–in your evaluation of the caps, and the likely outcome of the election to constitutionalize them. This will wreak havoc on cities and hamstring local officials. We might have noticed what a not-all-that-dissimilar measure did to California…..
Forgive me if I side with the taxpayers over the government. My bad.
It is such a shame that people threw up their hands and gave up before the fight was even begun. This bad law could have been defeated.
Abdul, you’re only siding with the wealthy taxpayers. The rest of us get nothing except poor government service.
Abdul wrote: “Forgive me if I side with the taxpayers over the government. My bad.”
So in this view of things, the taxpayers and the government are separate and diametrically opposed parties, locked a death wrestling match until the end of time. The government is greedily grasping for as much money as possible, while the poor hardworking taxpayers are eating boiled grass and watching (oh the horror) public television.
Let’s change the paradigm for a minute: what if the taxpayers and the government were working together to get the best public services in the most efficient manner? What if we realized that the government was actually made up of taxpayers? Because this seems like a much more realistic scenario to me.
I am a homeowner, and while I don’t necessarily relish writing the property tax check, I do realize that the money I pay goes to things like repairing the streets I drive on, maintaining the library I patronize, supporting the schools my neighbors’ children attend, and paying the salaries of firefighters, police officers, social workers, and thousands of other professionals whose services are vital to the safety and prosperity of our community. Those things are important to me, and I’m willing to pay for them.
It’s not all a bed of roses, obviously. I don’t agree with everything my tax dollars are spent on (prime example: huge bailouts for professional sports teams). On the whole, however, I think I’m getting a good deal. And I certainly don’t want to see my public services diminish in quality (and if the caps are enacted, they will) just so that some politicians can polish up their populist credentials.
I agree with Abdul that there are many cases where spending is out of control. I also agree taxes in general should decrease in Indiana.
What I don’t agree with is the debate about property tax caps. We have sales tax (that has gone up) and income tax as well. Editing our Constitution for one type of tax while leaving the others free to grow to replace what we held back in property tax is just dumb.
I honestly think that if property taxes are set by the local government, they should be the easiest to change OR take action into your own hands. If I don’t like how much property tax is in Bartholomew County, I can try to get the county to change. I can do that easier than I can get the State of Indiana to change, especially if it means changing the Constitution. What if I think they Constitutional level is too high?
If I fail to change the county’s mind, it isn’t hard to move outside of the county and still be able to commute from the county next to me. It isn’t as drastic as moving from one state to another.
Really, if you want lower taxes, enshrining a tax into the Constitution is the last thing you should try to do.
Interesting the continuing disconnect with those who believe government and people (taxpayers) are a situation of “we vs them”. The “we vs them” may be philosophical and political but reality is we get the government “we the people” vote for and/or allow. We are the whole group with “government” merely a term for the organized activities we have as to services. How many who complain the most even bother to: a) vote as informed person, b) have sought to understand the rules and regulations that are set forth as to how even our local government must operate, c) have participated in a meeting of a local governmental unit (as an official, volunteer committeeperson, or as part of the public sitting in on the meeting), and d) the hundred other things that go into getting services provided on continuing basis. There is little wonder that some people who really want to be involved get discouraged when constantly put down. Too often have heard someone say “I can not get involved–because: lose business due to any stand I take, people will harass me to death over everything, etc.” I salute the people who do accept responsibility of trying to make things happen in every community in order that the services we expect and need are there on a continuing basis.
I, too, oppose both the caps and the continuing limitations placed on local government by the collective wisdom of the governor and the legislature. God, save me from them and their attempts to save me.
abdul claims he is “siding with the taxpayers”, yet only 4% of the tax cap benefits go to homeowners.
wasn’t protecting homeowners the whole point of the property tax protests? funny how that worked out…
We elect the government, it spends on our behalf, and then those bills need to be paid. What our current political discourse is sorely lacking are adults willing to accept responsibility for paying our (the government’s) bills. Oh, it was this other thing– the government– that spent the money? Oh, well never mind then!
Taxes: Part of being a grownup. Deal.
Lots of interesting points. I believe the cap will pass. What amazes me is the sleight of hand that goes on. Powerful interests convince taxpayers to cut wealth-based taxes and raise them on the lower and middle class through brutally regressive taxes such as the sales tax. The dumb SOBs are not even smart enough to understand their own economic interests and protect them.
Golly, but ain’t God been good to Indiana.
Tax caps will mean that Indiana will soon have to take over the city of Gary. Of course this shows just how good a job the politicians to at sucking the teat of the poor. Basically my property taxes are in line in Shererville/St.John township. (at 1%). If I were in Gary, and my house had the same value; my taxes would be around $18,000-$25,000 more.
stAllio: Slight correction: only 4% of the CURRENT tax cap benefits go to homeowners. We don’t know what the cap benefits might be in 5 or 10 or 50 years. What we want to do is avoid property tax situations like are present in Illinois, where property taxes for residences can be about 3% of the home’s cost each year.
I am not saying the tax cap is the best way to do this, but this Amendment is basically a Indiana Constitution mandate that Indiana wants to have low taxes. Personally, I would prefer that we eliminate wasteful spending (especially in the amount and cost of school administrators). However, the idea is that the caps will force shools to spend less.
It is a good idea, but I am a bit worried that we are looking at the wrong end of the dog here.
Proposition 13 in California started this whole mess, but nobody makes the connection between the ‘tax revolt’ and California’s constant near-bankruptcy.
Granted, CA compounds their problems by passing mandates that have no chance in hell of being funded but we’re already beginning to reap the ‘benefits’ of tax caps in slashed funding for everything from schools and libraries to police and fire departments, among other things.
My guess is that some ‘loophole’ will be found or in a few years, we’ll see the assessments go up astronomically… for homeowners, but not (of course) for businesses.
To be honest, this is amusing me to no end. The same small-government conservatives who rail against federal taxation are, to one extent or another, arguing that the State of Indiana should assume essentially the equivalent role in distributing state funds to municipalities based upon their own proprietary ‘formulae.’
property taxes, in so far as you began with how much money you wanted to raise, and decided how much to tax from that point, were always a lousy idea, except for the taxing bodies which never really voted to ‘raise’ a tax. Whether the value of ones property is an accurate assessment of ones wealth is probably relative to when one acquired the property. Anyway, this is going to pass, unless I’ve missed the campaign against it, so the next logical questions, post wringing of hands, ought to be 1) where can entities that used to rely on old property taxes save money (and believe me, those do exist in droves), and 2) what are other forms of taxation that could be made available to those entities (since the basis of the argument for caps, at least in part, was that we would ‘shift’ the tax burden to other taxes.
Where is the 4 percent number coming from? A 2010 statewide property tax report (covering 90 counties) shows 25 percent of the relief going to the 1 percent category. I am confused between the two numbers.
Maybe my mind is warped because I live in Lake County, but “we” the taxpayers are NOT the same as the voters. I get outvoted 20 to 1 by people who don’t pay any taxes. “They” have 4 out of 7 votes on our County Council. They have 2 of 3 of the Commissioners.
I have been pretty skeptical of the tax caps on my blog (just went back and looked at what I was saying about it in ’08 when they first passed). I am worried that we are just trading property taxes for sales and especially income taxes, which aren’t capped.
But the year before the caps were enacted, my property taxes did increase 25%, and hit 5 figures (ouch!) and the caps have brought that back down to where they were in about ’06 pay ’07. This year they’ll be even lower.
And so far we have avoided the income tax here in Lake County. If we can continue to avoid it, I like the caps.
I already previously addressed the idea of setting public policy through constitutional amendments:
http://www.newgeography.com/content/001611-the-vote-democracy-or-disease
The short answer is that it comes from Morton Marcus. I didn’t check it, but he’s a reliable kind of guy, so I’d be surprised if he were wrong about something like that.
I believe that comes from this 2009 report (pdf).
Tax caps are meant to hamstring local governments, the same mitch and his ilk wanted to get rid of if you remember his “study” chaired by kernan and the judge. Having helped the committee looking into the education reform section, I know the “study report” did not reflect what was learned in the meetings (public) nor did it accurately reflect what was said in the public meetings. It did reflect what the a- priori assumptions of mitch were and it repeated his mandates that are not supported by the facts. After the tax caps are set, watch for your assessed value to rise. 1% of 100000, then 1% of 150000, then–well you get the idea. The state can raise the assessed value at will while the elected slugs claim they are holding the line on taxes.
“oh what a tangled web we weave when first we practice to deceive”. It is beyond scary to wonder if a master plan has not been put in place by some a bit smarter than generally has been given credit for–. Mitch, Bennett, and others may have set the stage for a major (really BIG) set of changes that will impact all. And, like sheep being led to slaughter by the goat we faithly follow. It will be interesting to watch as events play out during the next 2 years both at the state and national level based on what is now expected in next Tuesday’s election. And, just like the property tax assessments going up –it can all be blamed on the system (read in this case, local government, which in reality had no control of things, but perception is ones reality.)
Why are those that are for smaller government undermining the smallest forms of government (cities and counties) in favor for a centrally managed government?
Just wait until the local governments are starved and depend on the state for everything. Once the state is run by Democrats again, the Republicans will decry how the liberals in the state house are meddling with local affairs in our good old small towns.
Morton Marcus is good. But there is a new 2010 report that shows some big differences from 2009. Only 11.5 percent of homesteads hit the cap but overall those in the 1 percent category got 25 percent of the relief. 2 percent category is still leading with half of relief.
http://www.in.gov/legislative/pdf/2010STATEWIDE90COS.PDF
Buzzcut wrote: ” I get outvoted 20 to 1 by people who don’t pay any taxes. “They” have 4 out of 7 votes on our County Council. They have 2 of 3 of the Commissioners.”
Really? I don’t know anyone who doesn’t pay taxes. Everyone who buys anything (well, almost anything) in this state pays Indiana state sales tax on it. Sometimes there other sales taxes levied by the community or development as well. So we’re all taxpayers in that sense.
If you meant “people who don’t pay any income taxes,” that’s a different thing. What do you think we should do about that? Should we make everyone pay income tax, even people who are receiving assistance? It seems kind of inefficient to take money away from them and then pay it right back.
But that really doesn’t matter, does it, because there is absolutely no connection between one’s tax liability and one’s voting rights. Unless you want to go back to the days of property requirements and poll tests for voting, that is.
unless the owner of apartments and other rental property is very charitable or an idiot, all renters pay property taxes. And the poor pay a disproportionate share of their income in sales taxes and user fees.