Tax caps need work

Opinion

Discussion

December 26, 2009

Anonymous The Kokomo Tribune Sat Dec 26, 2009, 10:39 PM EST

Indiana lawmakers next month will consider a resolution to add property tax caps to the state constitution. If the measure passes, the issue will go before voters next November.

Our hope is that lawmakers will reject the measure.

We understand the arguments on the other side. Advocates say that the tax caps approved in March 2008 resulted in the largest tax cut in Indiana history, cutting the tax bills of Indiana homeowners by an average of 30 percent.

They say the way to lock in that savings is to add tax caps to the constitution, making it more difficult for some future Legislature to wipe out the protections that are now a part of Indiana law.

Gov. Mitch Daniels points out that Hoosier property taxes are now eighth lowest in the nation. He says the median Indiana homeowner, with a house valued at $125,200, pays $844 a year in property taxes.

If those numbers are accurate, then this so-called median homeowner is currently more than $400 below the state’s much celebrated cap. With a tax cap of 1 percent on residential property, the median homeowner’s tax bill could go up by nearly 50 percent without exceeding the cap.

Where’s the protection in that?

And let’s not forget the potential increase in assessed value. There is no cap on that.

But here’s where the real unfairness comes in.

Agriculture and rental properties have a tax cap of 2 percent. Businesses have a cap of 3 percent.

Let’s take that same average Indiana house valued at $125,200. If it’s used as a rental, the house could rack up a tax bill of more than $2,500 and still be within the cap. A business with that same assessed value could have a tax bill of roughly $3,800.

Is that fair? Do apartment dwellers use twice as many government services? Should businesses really be paying three times as much as homeowners on the same assessed value?

What about farmers?

Let’s take 300 acres of farm ground valued at roughly $500,000. As a house, that amount of real estate would get a tax bill of no more than $5,000. As bare ground, the tax bill can go as high as 2 percent of the assessed value, or $10,000.

Does a field of corn really use that many more government services?

Surely, there’s a more fair way to control the rise in property taxes. We’d suggest Indiana lawmakers take another look before they lock anything in to the state constitution.

– Pharos-Tribune, Logansport, and Kokomo Tribune

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