WISH-TV has a poll on whether to repeal the property tax and, if so, what to replace it with.
40% say keep the property tax.
20.9% say replace the property tax with gambling revenues.
14.85% say replace the property tax by increasing the sales tax.
7.7% say replace the property tax by reinstating the business inventory tax.
4.95% say eliminate the property taxes through cutting state services.
3.3% say replace the property tax with local option income taxes.
(A note about my methodology – the WISH-TV poll says that 40% of respondents are willing to keep the property tax. Of the 55% who favor elimination, the poll reported numbers for how those people would replace the lost revenue. I multiplied the replacement percentages by 55% to determine how those numbers fit into the population as a whole.)
I’m not sure we have anything here other than a general sense of not liking to pay taxes. Note that the most popular way of replacing the money is through gambling revenues – which I read as “make those dumb gamblers pay for stuff so I don’t have to.” You have only about 1/4 of respondents who want to replace property taxes with a different tax that the respondent will likely have to pay directly.
I am mildly amused at the headline being run by the Associated Press on the poll. “Poll: Tap state surplus to ease property tax burden.” The recent property tax crisis was caused in no small part by the process that led to the State “surplus” in the first place. The State has recognized that it imposes a good many burdens on local government and, the State helps out by subsidizing local property taxes. In 2005, the State “balanced” its budget, in part, by capping the property tax subsidy. This resulted in higher property taxes. So, the poll is really just saying, apparently, that the State should return to paying higher property tax subsidies.
[tags]property taxes[/tags]
What percentage of the respondents had any significant knowledge of tax policy and/or economics?
They are citizens and make decisions based on a variety of factors. A Ph.D in Economics is not required to vote in America. A politicians job is to devise acceptable methods of paying for the government people want.
I wonder how feasible each one these choices are? Are there enough gambling revenues to replace property taxes? I think state government is about as lean as it’s going to get without services being cut. A business inventory tax doesn’t seem like a good idea, as it’s just a hidden sales tax. I think an income tax would be the worst. IMO, taxes should center on how much you consume, not how much capital you’re making or own. Also, the sales tax is the only one in the bunch that will promote investment and saving.
Interesting that only 5% of the population favors cutting government services, despite the property tax “mess.” That in a nutshell might explain why the Libertarian Party just doesn’t ever gain much traction…when it comes down to it people don’t mind “big government” all that much.
My issue with the sales tax, which lots of others have too, is how do you keep it from being a regressive tax? I.e., the lower your income, the greater percentage of your income you use to buy things, so the tax falls dispoportionately on those with lower incomes (a higher percentage of their income is taxed). Guess that’s why if property taxes are “replaced” that I’d prefer Indiana adopt a progressive income tax structure instead, like the federal income tax.
The gambling revenues thing is silly. You’d have to turn Indy into Las Vegas, & there still probably wouldn’t be enough to offset getting rid of property taxes…
Here in Lake County there will be no easy fix. Our casino boat money is already split between the communities; with the largest share going to the communities that “host” the boats. Other county communities get a smaller share. I can tell you right now that they have that money spent!
Our biggest problem right now is that Gary, East Chicago, Whiting and Hammond developed bloated governments that were highly subsidized by property taxes on US Steel, Bethlehem (now Mittal) Steel and BP/Amoco. Now the lion’s share of the tax burden is on homeowners; and those communities are unwilling to cut back on their pork. We also have highly inefficient township governments; basically $0.40 out of every $1.00 gets to the people who need it.
Our property tax situation has been so bad that we have not had a tax bill on time since 2001. They are telling us the bills that were due in May should be in our hands around Christmas; and none of us has a clue what to expect.
Finally, there is a huge inequity among the working class/poor and the middle/upper class tax rates. I live in Schererville, which is mostly a bedroom community (little industry). I am expecting my taxes to be around $2,800-$3,400. If my house were in Gary’ Miller section (and my house assessed value remained the same) taxes would run me around $20,000. Sound fair?
There’s no easy fix.
The simple fact is the majority of citizens want everything from the government and they don’t want to pay for it.
Politicians serve as enablers for our behavior, instead of telling us the honest truth, because they like staying in office.
“My issue with the sales tax, which lots of others have too, is how do you keep it from being a regressive tax? I.e., the lower your income, the greater percentage of your income you use to buy things, so the tax falls dispoportionately on those with lower incomes (a higher percentage of their income is taxed).”
Why does it matter what someone’s income is? Food is already exempt from tax, so I’m not really sure why it matters if it’s based on consumption of goods that aren’t necessities? To those that have less, they’d spend less and save more… I’m not sure how that’s a bad thing.
In part, it’s a matter of identifying those non-food items that are necessities and those that are not. How about gas, for example? A new furnace? A radio? A weather radio for a trailer home?
How many “poor” people put new furnaces in their home? As far as fuel goes, again…the tax would be on consumption. If gas prices are higher, more people would take mass transit and get more exercise. Not sure I see the downside. Food, clothing , and shelter are necessities. You don’t need a car (I know, I’m almost 40, and I didn’t own a car for three years), or a radio, or a furnace to live.
The bottom line is the sales tax is the only one of the choices that have an upside.
It’s not necessarily “poor” people who are taxed unfairly under a flat sales tax system, but the middle class too. Here’s an example…person making $50,000 per year buys a pretty basic compact car for $15,000. Assume the sales tax is bumped up to 10%, that’s sales tax of $1500, or 3% of the person’s income. A person making $250,000 per year buys a $50,000 luxury sedan or Hummer. Sales tax of $5000, or just 2% of the person’s income. Or, more drastically, if the “rich” person buys the same compact car (yeah right), the sales tax is just .6% of the person’s income. Necessities or not, I don’t get how a flat sales tax, as opposed to a graduated income tax or property tax based (ideally) on the value of property you own, is fair.
Economy-wise, is it a good idea to put a damper on consumer demand by raising sales taxes? I know, in theory if you could simultaneously lower property and/or income taxes, consumers would have more to spend, but it seems psychologically a big leap in sales taxes would put a damper on the economy.
And, I must say, it’s a bit draconian to think a furnance is not a necessity in Indiana…unless you want to take the fire/carbon monoxide risk of relying on space heaters.
Glenn,
as someone that IS poor (single parent making under 20k), this isn’t a hypothetical for me. People that are POOR typically don’t buy a home, they rent. I’ve rented for a long time, and I’ve never had to buy a furnace. It’s only draconian thinking when you’re rich. ;)
I’ve bought one new car in my life, a 1992 Hyundai Excel GS. Your example of sales tax isn’t even something I have the luxury of having. The rest of the taxes listed are something that will affect me, yet I will have NO control over.
Joe said:
That pretty much sums it up in a nutshell. I’m not a Libertarian at all, in fact I’m a Democratic Socialist. I don’t mind paying for services, but to my thinking it should be paid by those who are buying things that aren’t necessities.
IMO, the economy NEEDS a damper put on it as far as consumption. We’re in Iraq because of oil, because of the middle class’ want for big vehicles, with low gas mileage. Consumption is fueling a lot of problems on the horizon ( ie. global warming and our growing debt with Japan and China). A sales tax would encourage people to save their money instead of spend it as they get it. Conservation on so many different levels is vital. A sales tax is the only choice that encourages this.
Good points Marti. While I don’t think I’m a Democratic Socialist, I do agree that taxing things like gas (FOR ALL USES, not just personal. This means Jet Fuel and Diesel for corporate semis).
Until gas cost more in the range of $8/gal, we’re going to be putting a band-aid on our problems around oil and its by-products.
“Good points Marti. While I don’t think I’m a Democratic Socialist,”
Thanks…
I think I may borrow from that good ole redneck, Jeff Foxworthy…
If you think Social Security is a good thing… you may be a Democratic Socialist.
If you like a government run police, education, fire, and EMS, you may be a Democratic Socialist.
Many people support ideas that aren’t aware are based in socialism (selective nationalization of key industries within the framework of mixed economies).
Agreed.When gas rose to over 3 dollars a gallon, I saw co-workers actually get rid of their Tahoes and Suburbans for smaller vehicles. The drive from Bloomington to Indy can get mighty expensive in a vehicle that gets 17mpg.