With all the turmoil being created by the property tax discussion, it may be time for some plain talk that will explain the taxation "Facts of Life." There are individuals out there saying, "Let's just repeal the property tax." Their intentions are noble because they want to lessen the burden on Indiana's property owners. I agree with the concept - even voted for it in 2006 when Representative Dobis offered an amendment to repeal all property taxes. Please check my voting record. As the investigation of this concept continues, it becomes more and more apparent that this is no simple and easy task. Just voting for an amendment doesn't make it happen.
Some "Facts of Taxation Life":
1. It will require a Constitutional change to permanently eliminate the property tax. 2. Changing the Constitution requires: a. Passage of the same amendment with the same language by two consecutively elected General Assemblies. b. Then a public referendum, to allow the people of Indiana to vote on the issue. The time frame for this process to be carried out is about 5 to 6 years. 3. Our problems are immediate and there is urgency to provide short-term relief. 4. Bonded indebtedness that communities have accumulated to pay for public needs such as schools are supported by the property tax, and repayment must be made by the same source. Changing the income stream that repays those debts is very complicated and affects the bond and financial community. There are many unintended consequences that accompany these major changes. 5. Replacing the property tax with sales and income taxes sounds simple but our state must remain competitive with our neighbors or commerce will suffer. 6. Property taxes generate a huge amount of revenue statewide - about $6.3 billion. Major increases in sales tax and income tax are necessary to replace the property tax revenues. 7. An additional penny on the sales tax will generate about $950 million. 8. An additional 1% on the income tax will generate about $1.4 billion.
Regardless of the subject matter, the "Facts of Life" make most of us uncomfortable when discussing them. Our system of taxation is no different. It is an inaccurate claim that we can eliminate property taxes quickly. Even worse, it misleads the public. Changing our current system demands that the state take a measured approach. Some suggestions to begin:
1. Eliminate the child welfare and school general levies and replace those revenues with broad-based state taxes. 2. Begin the amendment process to change the Constitution and repeal the property tax. 3. Allow local governments to achieve more control and efficiency in their administration of services. 4. Address the issue of replacing funding to service the bonded indebtedness. This must include schools, jails, libraries and all public buildings. 5. Enact proposals that have short-term, immediate relief as well as long-term relief. 6. Stay the course. There will be many temptations to back off of the goal after some improvement is achieved. Legislators can't lose sight of the ultimate goal of eliminating property taxes.
If this were an easy task, it would have already been accomplished. Accurate information and a reasoned approach are absolutely necessary. Most will agree that adjustments are necessary, and I agree with that opinion.
Let's move ahead with positive, reasonable and workable suggestions and leave the extreme and inaccurate proposals behind. The environment is right to make major changes, but they must be in the best interest of every Hoosier. Please remember the "Facts of Life."
More later,
Bill |
