Tax Plan
July 28, 2016 at 4:25 p.m.
By -
Last week, the governor's property tax plan got forwarded to the full house without incurring the normal check and balances of debate or consideration of amendments. This bothers me.
This is an important bill for each of us and for the future of Indiana. There needs to be some check and balances. There is a lot of ballyhoo about homeowner property tax relief. But when I look at the facts, I find a lot of surprises. Maybe we can use letters to the editor to open up a public discussion and provide some check and balances.
To that end, I downloaded and printed the subject bill, House Bill 1001. It was 161 pages. I have been studying it. Below is a summary of the high points. I have tried not to be judgmental. I will leave that to supplemental letters. Hopefully, others will help with that role.
Anyway, the bill does the following:
Increases the state sales tax to 7 percent.
Eliminates state-reimbursed homestead credits.
Eliminates state-reimbursed property tax replacement credits. Gambling taxes that are now going toward the property tax replacement credits will go to the state general fund.
Eliminates the position of township assessor. Reassigns the township assessor functions to the county assessor. Eliminates the elected county assessor and replaces him or her with an appointed county assessor.
Homestead is defined as an individual's principal place of residence that the individual owns or is buying under contract. It consists of a dwelling and real estate not exceeding one acre. A homestead deduction will consist of the lesser of half the assessed value or $44,000 gradually declining to $40,000 in 2012. An additional deduction is established equal to 35 percent of the assessed valuation. The 35 percent is calculated after the application of the standard deduction.
Establishes or increases circuit breaker credit for homesteads, residential rental property and all other property. These breakers establish a cap on property taxes based on a percent of assessed value. The property tax circuit breaker credit for homesteads is increased by reducing the cap from 2 percent to 1 percent. The breaker cap for residential rental property remains at 2 percent. The breaker cap for all other property remains at 3 percent. The ending date of these breakers has been decreased from 2010 to 2009. (Note that the 3 percent cap will apply to things like second homes, farmland, commercial rental property, etc. Given that the state reimbursed homestead credits and property tax replacement credit are ending and given the decreased camp on homestead properties, it is likely that these will experience significant increases in taxation.)
Prohibits the taxing districts from establishing certain levies. These levies include school tuition support, school transportation fund, county medical assistance to wards, family and children's fund, children's psychiatric residential treatment services, children with special health care needs county fund, State Forestry, State Fair Fund and the Department of Local Government Finance date base management levy.
Replaces the authority of the county to impose an annual levy growth tax rate, a public safety tax rate and a property tax replacement tax rate with a singe rate not to exceed 1 percent.
Changes the formula for determining maximum possible growth in certain other levies.
Requires a referendum on bond issues and lease agreements payable from property taxes or local income taxes that cost at least 1 percent of the political subdivision total net assessed value or $10 million, whichever is lower.
Eliminates the authority of a county to restrict review of levies, tax rates and budgets by a county board of tax and capital projects review.
Permits a referendum to increase a levy in excess of the amount approved by the county board of tax and capital projects review.
Howard Woodward Jr.
Warsaw
Editor's Note: This letter was edited to conform more closely to the 500-word limited stated in our Letters Policy.[[In-content Ad]]
Last week, the governor's property tax plan got forwarded to the full house without incurring the normal check and balances of debate or consideration of amendments. This bothers me.
This is an important bill for each of us and for the future of Indiana. There needs to be some check and balances. There is a lot of ballyhoo about homeowner property tax relief. But when I look at the facts, I find a lot of surprises. Maybe we can use letters to the editor to open up a public discussion and provide some check and balances.
To that end, I downloaded and printed the subject bill, House Bill 1001. It was 161 pages. I have been studying it. Below is a summary of the high points. I have tried not to be judgmental. I will leave that to supplemental letters. Hopefully, others will help with that role.
Anyway, the bill does the following:
Increases the state sales tax to 7 percent.
Eliminates state-reimbursed homestead credits.
Eliminates state-reimbursed property tax replacement credits. Gambling taxes that are now going toward the property tax replacement credits will go to the state general fund.
Eliminates the position of township assessor. Reassigns the township assessor functions to the county assessor. Eliminates the elected county assessor and replaces him or her with an appointed county assessor.
Homestead is defined as an individual's principal place of residence that the individual owns or is buying under contract. It consists of a dwelling and real estate not exceeding one acre. A homestead deduction will consist of the lesser of half the assessed value or $44,000 gradually declining to $40,000 in 2012. An additional deduction is established equal to 35 percent of the assessed valuation. The 35 percent is calculated after the application of the standard deduction.
Establishes or increases circuit breaker credit for homesteads, residential rental property and all other property. These breakers establish a cap on property taxes based on a percent of assessed value. The property tax circuit breaker credit for homesteads is increased by reducing the cap from 2 percent to 1 percent. The breaker cap for residential rental property remains at 2 percent. The breaker cap for all other property remains at 3 percent. The ending date of these breakers has been decreased from 2010 to 2009. (Note that the 3 percent cap will apply to things like second homes, farmland, commercial rental property, etc. Given that the state reimbursed homestead credits and property tax replacement credit are ending and given the decreased camp on homestead properties, it is likely that these will experience significant increases in taxation.)
Prohibits the taxing districts from establishing certain levies. These levies include school tuition support, school transportation fund, county medical assistance to wards, family and children's fund, children's psychiatric residential treatment services, children with special health care needs county fund, State Forestry, State Fair Fund and the Department of Local Government Finance date base management levy.
Replaces the authority of the county to impose an annual levy growth tax rate, a public safety tax rate and a property tax replacement tax rate with a singe rate not to exceed 1 percent.
Changes the formula for determining maximum possible growth in certain other levies.
Requires a referendum on bond issues and lease agreements payable from property taxes or local income taxes that cost at least 1 percent of the political subdivision total net assessed value or $10 million, whichever is lower.
Eliminates the authority of a county to restrict review of levies, tax rates and budgets by a county board of tax and capital projects review.
Permits a referendum to increase a levy in excess of the amount approved by the county board of tax and capital projects review.
Howard Woodward Jr.
Warsaw
Editor's Note: This letter was edited to conform more closely to the 500-word limited stated in our Letters Policy.[[In-content Ad]]
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