Personal Property Tax Elimination | Position on Township Assessors | Technology and GIS

Personal Property Tax Elimination

Eliminating any tax always seems like a good idea.  With April 15th not too far away, I daydream about getting rid of the federal income tax.  But as with any tax, we have to ask ourselves:  what does the money go for, are those functions something to support, and finally is there a better way to raise such revenues?

In Indiana, we have typically relied more or less on three main taxes to support state and local services: the income tax, the sales tax and the property tax.  Think of that combination as a three legged stool.  It was easy to predict that local governments would face serious budget issues, when the state effectively shortened the property tax leg in 2008, by increasing the sales tax in order to lower the real property tax.  Since the sales tax is collected and spent by the state and real property taxes fund local governments, the result was less local revenue while simultaneously increasing the sales tax leg which benefits the state.  This also placed local governments in the precarious situation of having to rely more on less stable sources of revenue.

 That’s exactly the situation we find ourselves in today.  Local governments that provide such services as local roads, bridges, police and fire protection and substantial school funding are forced to cut these services and look to other far less stable revenue sources to balance their budgets. Think of it as again shortening the property tax leg of our three-legged stool at the local level.  Meanwhile state officials worry about the size of the state surplus.

It will come as no surprise to many of you that while local budgets have been cut due to the Great Recession and loss of property tax revenue due to the property tax caps, the State of Indiana budget has increased every year.  While the State of Indiana seems to do less with more, local government is asked to do more with less.

Elimination of the personal property tax falls in line with the train of thought that if business taxes are cut,  good jobs will trickle down to the masses.  I'll remind you that Indiana eliminated the inventory tax about 10 years ago.  While I'm not certain how many jobs this produced, I am aware that Indiana still lags the nation in average wages.

Forecasts show that eliminating the business personal property tax will increase (yes, increase) the property taxes paid by homeowners, landlords and farmers by several hundred dollars annually.  Plus, assuming the public still needs local roads and a police force, cutting the business taxes will require an increase to the local option income tax.  While the Governor feigns ignorance as to what taxes will replace these revenues, additional real property taxes, additional local fees and addition local income taxes are the only sources available.  Since many tax districts in Lake County are already at the real property tax caps, rest assured that local services would need to be reduced or local fees and the countywide income tax would need to increase substantially. 

This notion of personal property tax cuts ignores other issues that businesses typically site in considering relocation:  workforce education, local infrastructure and top-notch schools for employee’s children.  Does it make sense to gut a key funding source of these services and decrease their quality to improve Indiana’s status in the sole area of business taxes?  I have always found it easier to sit on a stool with three legs of equal length.  Cutting the property tax leg even more will inevitably result in less balance in the state’s tax structure and more reliance on less stables sources paid by homeowners, landlords and farmers. 

Long story short, the voting public – you and I – will definitely pay more in local property taxes and definitely pay more in local income taxes on the hope and prayer that more businesses locate to Indiana and those businesses pay higher wages than we currently earn. The costs are assured, the benefits very elusive.   If you are like me and not willing to gamble away your local services, local roads and our valued police and fire protection, let your elected state representatives know. 

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