Friday, March 07, 2008


Property tax relief will create winners, and losers.

Over the next two weeks, Indiana lawmakers will make significant, far reaching decisions about taxes that will affect every Indiana resident. Homeowners, renters, consumers, workers, business owners, farmers, students - all have something at stake.

What proponents are billing as property tax "reform" is in fact a thinly veiled shift in the tax burden. Details on the new tax structure are still being worked out, so exactly how Hoosiers will be affected is unknown.

In many counties, based on preliminary analyses, "middle-class and lower-class homeowners lose, and higher class homeowners win.

Invoking a property tax "crisis" that was largely of their own making, legislative leaders are pushing plans that would crimp the ability of local government. And it should!

Yet the final tax package will likely make only some headway in answering the bottom-line question most Hoosiers ask: How much will my property tax be this year?

Here is Indiana's current property "tax cut" plan:

* Reduce the increase in tax deductible property taxes and shift the entire tax burden to non-deductible sales taxes

* increase the local income tax

* Phases in the property tax reduction over a period of years (if at all), while the increase in the sales tax and local income tax will take effect immediately.

But things can change in the next two weeks.

This tax shell game is a huge tax shift combined with a tax increase.

What's next ~ Nothing is certain!

Lawmakers could reject the Daniels tax plan. They could pass a version that eases some of the financial strain cities are expected to face. And we hope so...They could base property tax caps on personal income rather than property value.

With the property tax legislation heading toward conference committee, virtually anything could emerge in the final package.

What seems more likely, though, is for the package to resemble key parts of the Daniels tax plan with a higher sales tax, property tax caps and tougher limits on local spending that could well lead to higher local income taxes.