Senators Wyss and Long Vote to Lower Property Taxes
by 20 Percent
STATEHOUSE—Senators Tom Wyss (R-Fort Wayne) and David Long (R-Fort Wayne) voted in favor of real, permanent property tax relief by supporting House Bill 1001 today. The bill passed by a vote of 37-12. The proposal will provide counties with the option to vote for income tax increases to replace the revenue that would be lost from cutting property taxes.
“Every year, lawmakers talk about the need to remove the property tax burden,” Senator Long said. “We aren't getting rid of property taxes with this bill, but we are providing a legitimate first step away from this unfair, antiquated form of taxation.”
Statistics show that Indiana ranks among the worst in the nation in reliance on property taxes to fund local government. Indiana funds 89 percent of local government with property taxes. The national average is 78 percent and falling. That makes Indiana the 15 th worst property tax state in the nation.
Also, Indiana is 14 th worst in the nation in reliance upon property taxes in relation to sales and income tax. Property taxes provide 37.2 percent of income from “the big three” compared to national average of 32.4 percent and falling.
“The percentages may sound small,” Wyss said, “but we are talking about billions of dollars here. The days of temporary property tax relief are numbered. This has the potential to be a permanent solution.”
In order to reverse this trend, however, the legislature must find a way to replace the revenue from property taxes. The Senate version of HB 1001 does that through optional local income taxes. Under the bill, taxing units in each county will take two votes. The first will freeze property taxes at current levels by increasing the income tax by less than one percent. The second will lower property taxes by an average of 20 percent statewide and replace that revenue with an additional 1 percent income tax. Relief will begin in 2007.
The income tax has proven to be a more equitable tax. Farmers, elderly Hoosiers, and small business owners, for example, may have high property tax bills but low incomes. All three groups will benefit from the Senate's proposal. A citizen's actual income is a much better measure of ability to pay than the assessed value of their property.
HB 1001 will now likely go to conference committee so differences between the House and Senate version can be ironed out.
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