PROPERTY TAX CAPS COULD BE ENGINE FOR JOB GROWTH
Indiana voters in November’s general election will decide if tax limits will be added to state Constitution – once and for all
STATEHOUSE – Hoosier voters in November’s general election will determine if permanent caps on property tax rates will be added to the Indiana Constitution.
There is evidence property tax caps may do more than help Hoosier homeowners. They may also create jobs.
A study released by Ball State University concludes Indiana’s 2008 property tax relief and reforms could over time result in as many as 97,000 new jobs statewide.
BSU economists who studied the impact of Indiana capping property tax rates also expect more immediate improvements in industries that had been negatively impacted by high property taxes. The report specifically pointed to early gains among real estate rentals and sales, wholesale and finance industries.
“Businesses experience a relatively large decrease in property tax payments,” according to BSU’s report entitled, “The Economic Effects of Indiana’s Property Tax Rate Limits.” Savings each year among businesses were estimated at $248 million in the short run and $103 million annually in the long run.
Overall, state and local government will take $496 million less from homeowners, farmers and employers, despite a 1 percent increase in sales taxes to fund shifts in local responsibilities to the state level. Those are significant numbers in terms of impacting disposable income for Hoosier households and investment capital available for employers and potential employers looking to locate in Indiana.
Meanwhile, homeowners in Allen County have experienced a 30 percent decrease in property taxes from 2007 to 2009, according to a non-partisan report. These results tell us the tax policies enacted in March 2008 are helping Hoosiers keep and spend more of their hard-earned dollars, spurring local economic activity. The report showed statewide property tax collections dropped from approximately $2.2 billion in 2007 to just under $1.5 billion in 2009.
A modern, fair, stable and predictable tax structure is paramount for Indiana to compete in today’s global economy. Yet it’s been a bumpy road for this legislation.
Immediately after a property tax crisis that sent tax bills skyrocketing and hordes of homeowners to the Statehouse demanding reforms, senators and House members in 2008 passed the phased-in property tax caps into law and started the constitutional amendment process. The Republican-led Senate kept momentum for the amendment by passing it again in 2009, but the caps did not receive a vote last year in the Democrat-controlled House.
While a negative advertising campaign was launched on radio and in newspapers against the property tax caps earlier this year, lawmakers didn’t lose sight that many fellow Hoosiers suffered from desperate, life-changing decisions because of Indiana’s most recent property tax crisis. For too many – especially seniors on fixed incomes and young homeowners on limited incomes – Indiana’s antiquated property tax system served as an unfair, outdated gauge of their wealth and their ability to pay ever-escalating taxes.
Members of the Indiana Senate and House of Representatives this session gave final passage to a resolution that would constitutionally cap property tax rates at 1 percent for owner-occupied homes, 2 percent for other residential and agricultural properties and 3 percent for businesses.
This year’s final passage of this historic reform sets the stage to add the 1-2-3 caps to Indiana’s Constitution. In order to change the state Constitution, an amendment must be passed by two separately-elected sessions of the Indiana General Assembly and then approved by voters.
Putting this issue in the hands of voters proves lawmakers are siding with taxpayers and not tax spenders. It shows we intend to keep the promise of permanent property tax relief and reform. It’s appropriate Hoosier voters will have the final say on Nov. 2.
Sen. David Long (R-Fort Wayne) is President Pro Tem of the Indiana Senate. He serves District 16, which includes portions of Fort Wayne.
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