There are a lot of things to like about the property tax plan and there are alot of things to dislike about the plan. Lets look it at:
1. Capping residential property taxes at 1% of assessed value. I like this; however, they are still keeping a $45,000 homestead exemption in place and this should be abolished.
2. Raising the state sales tax from 6% to 7%. I am ok with this; however, we raised sales tax from 5% to 6% a few years ago to lower property taxes and look at what happened.
3. Shifts to the State 100% (State already had 85%) of the cost of operating schools and shifts to the State 100% (State already had 20%) of school transportation costs, shifts all of the child welfare costs to the State, and ends local government tax credits from the state. This is a mixed bag. I do not think the State should cover the local school costs at all. I do think the State should fund all of the child welfare programs they mandate and I really want them to end the property tax credits... This will help split the local government from the State and it will help prevent them from finger pointing at each other when taxes go up...
4. Caps rental property taxes to 2% of assessed value. This is utterly stupid. Rental properties already do NOT get a homestead credit. This means that overall those who own rental properties will pay more then double the property taxes of a homeowner who owns and lives in a residence of the same assessed value.
5. Caps business property taxes at 3% of assessed value. This is really, really stupid. Indiana has lost a lot of high-paying jobs and desperately needs to attract new businesses. If businesses have to pay 3% of their assessed value in property taxes (PLUS personal property taxes) Indiana will have one of the higher property tax rates for businesses in the country and this will make it hard to attract new businesses and hard for our existing businesses to operate. Furthermore this will make tax abatements even more critical and will hurt the small businesses who just cannot get tax abatements.
6. Adds a homestead deduction of 35% ON TOP OF the existing homestead credit of $45,000 in 2007. Once again this is really un-necessary. All this will do is allow even more people with lower value homes to pay less then the 1% cap...
7. Eliminates elected township and county assessors and creates a single appointed assessor in each County. This is one of the things I like about the plan. An assessor is a professional responsible for valuing property and complying with State law. They should not be elected and they should not be affiliated with a political Party.
8. The plan limits growth in local spending to growth in a counties average personal income over a six year period. This is a great idea.
9. The plan requires all significant local construction projects to a public referendum. This is also a great idea.
One question I have about the plan is how would if affect agricultural property? If anyone knows the answer to this please post it.
Mitch Daniels plan is a good starting point. I would change the following:
a. The homestead exemption should be eliminated and the 35% newly proposed homestead deduction should be removed. All residential homeowners should just pay 1% of the assessed value of their house and all exemptions should be removed. Lets keep it simple and fair.
b. Rental properties, agricultural land, and businesses should be taxed at 1% of assessed value as well.
c. To do the above I would raise sales tax another .5%.
WHAT DO YOU THINK?