Mary Beth Schneider has an article entitled Latest tax plan promises deeper cuts which discusses Rep. David Orentlicher’s plan to raise income and sales taxes higher than some other plans in order to further reduce property taxes.
This got me thinking about whether in addition to shifts between businesses and residential property owners whether these proposals might result in regional shifts. I don’t know the system well enough to know how things are collected and then distributed. It’s pretty clear where property is located and, therefore, where the tax revenue for the property should be distributed. Income and sales taxes may be less clear. For example, if an individual owned a lot of property in counties other than where the individual resides, the property taxes go down, and the income taxes go up, would that then result in a shift in revenue from the counties where the individual owned property to the counties where the individual resides? Same issue with sales taxes if the person travels away from the county where he or she owns property to do his or her shopping?
Also – and I fully admit that this might merely be the natural suspicion the rest of the State has toward Indianapolis and Marion County – I can’t help but feeling like these plans will some how result in the good folks of Tippecanoe County (and elsewhere) subsidizing mismanagement and procrastination in Marion County. I know that the property tax increases in Tippecanoe County have not been anywhere near as severe as those in Marion County. And, in fact, for whatever reason, my residential property taxes went *down*. Nevertheless, Tippecanoe County will face as much of an increase in sales and income taxes as the citizens of Marion County.
In any event, I suspect that Orentlicher’s plan makes sense for Orentlicher’s constituents. Hopefully representatives from other areas of the State will be vigilant in making sure that whatever plan is finally adopted makes sense for their constituents as well.
Great analysis. You are spot on.
Here’s how things are going to work. I work in Whiting. I live in Munster. I make a LOT of money.
Whiting is going to get those income tax revenues. Munster is going to get screwed.
Now, I actually use services in Munster. Whiting does absolutely nothing for me.
So how is that fair?
Property taxes are the fairest tax, because they’re taxes that are paid closest to the services being provided.
Local government should be funded by property taxes. The state should be funded by sales taxes. The feds should be funded by income taxes. That’s the perfect system.