Lesley Stedman Weidenbener has an article in the Louisville Courier Journal analyzing the property tax restructuring plan being considered by the General Assembly. According to Everybody’s Favorite Economist ™, Larry DeBoer, “The savings would be greatest among people who are “income poor and property rich,” a group that tends to include retired households.” The median household with an income of about $52k and a house worth about $121k would experience an overall tax savings of about $145 assuming that their county does not increase the local income tax; probably an unrealistic assumption in many locations.
Renters are losers under most variations of the plans because they don’t enjoy the property tax savings but they still pay the sales tax. Under provisions inserted by the House to assist low income Hoosiers, such renters break even if they make less than $25,000 per year.
People who are income rich and property poor will be the biggest losers.
It looks a little like we’re preferring people who are living beyond their means and penalizing people who haven’t over-committed on real estate relative to their resources. Certainly mid-income and high income renters are getting screwed.
I just pulled out my 2006 Indiana IT-40 and found that at last year’s income level, given the additional income tax rate our county council adopted, I’ll be paying an another 420.00 when the first full year under the new income tax comes due in 2009. If the 1/3 property tax savings holds true in our county, I’ll save a whopping 283.00. Along with that, I’ll get to pay an additional penny sales tax on all the taxable items I buy.
So here’s to the boobs that started the property tax hoo-ha of 2007! May you be inducted into the Lake County Tax Protester’s Hall Of Fame along with the gang of idiots that stirred up the last mess, leading to the court ordered move to a verifiable system!
Looking to get slammed by this…
Kind of reminds me of how the more kids you have, the more deductions–such that the less kids you have, the more you fund the schools, etc.
Here is Indiana’s current property “tax cut†plan:
•Reduce the increase in tax deductible property taxes and shifts the entire tax burden to non-deductible sales taxes.
This tax shift will not only increase the sales tax by 1%, but effectively increases homeowner’s federal income tax through the lost federal deductions.
•Increase the local income tax by up to 3.25%.
•The property tax reduction is phased in over a period of years (if at all), while the increase in the sales tax, local income tax, and federal income tax will take effect immediately.
Property tax caps on businesses, landlord, and agricultural property effectively shifts the corporate property tax burden to consumers who pay income and sales tax.
•Reduces no government spending.
•Eliminates no duplicate or unnecessary layers of local government.
Don’t believe the “tax cut” and “tax cap” rhetoric mindlessly repeated by the media.
This tax shell game is a huge TAX SHIFT combined with a TAX INCREASE.
Kind of reminds me of how the more kids you have, the more deductions
Not deductions, T, CREDITS!!!! Credits come off your tax bill, dollar for dollar. Deductions merely lower your taxable income.
That $1000 child tax credit bales my ass out every year. In the 10% tax bracket, that the same as a $10k deduction! In the 15% bracket, it’s the same as a $6,666 deduction.
You also get an additional exemption per child, which is an additional $3800 deduction on AGI.
Our public schools here in Munster spend $9k per kid, too.
Add it all up, and it is a staggering amount of money per kid.
Then look at the tax benefits of the morgage deduction and health insurance premium exemption, plus the tax benefits of 401(k)s and whatnot.
Add it all up. It is a lot of money the feds leave out there.
Good point, Buzz.
Wouldn’t you see that as a type of entitlement program? Being exempted from more tax the more kids you have is little different than paying the tax and then getting an assistance check.
Wouldn’t you see that as a type of entitlement program? Being exempted from more tax the more kids you have is little different than paying the tax and then getting an assistance check.
Well, you are working for it. So it is different than welfare in that respect.
Maybe its more like Socialist Insecurity, where there is a link to work, and benefits are based on how much you pay in, but where what is recieved is far in excess of what was paid in (well, at least for the geezers. You and I are totally going to get screwed).