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Reforming Indiana’s property tax system

By Scott Tibbs, October 29, 2007

-------- Original Message --------
Subject: Reforming Indiana's property tax system
Date: Sat, 27 Oct 2007 20:11:41 -0400
From: Scott Tibbs [tibbs1973@yahoo.com]
To: S40@IN.gov, H61@IN.gov

Senator Simpson and Representative Pierce,

The tax reform plan proposed by Governor Daniels has some interesting ideas that merit consideration by the legislature. I would like to share some of my thoughts on the plan.

First, I like the idea of making the county assessor an appointed rather than elected official. County Assessor is a skill position that should go through the same hiring process that any other position in county government should go through. The assessor should be chosen based on his or her resume, not the ability to win an election. Monroe County has been fortunate to have Judy Sharp, but many other elected positions all over the state have been filled with people who can win an election but cannot fulfill the responsibilities of the office.

In fact, the idea of making county assessors an appointed position should be expanded to other administrative positions such as the county auditor, treasurer, recorder, clerk, surveyor and coroner. If the legislature has the political will to make significant changes to the structure of county government that require amendments to the state constitution, there is no reason not to go for a complete (and needed) reform of our antiquated system of county government.

I question the proposal to place the cap of total property tax for rental properties at twice the cap for owner-occupied homes. Shifting more of the property tax burden onto rental properties will force landlords to pass some of that cost onto tenants. While this may be a net gain politically, it will harm people who rent their homes. I am leery of making it more difficult for renters to save up to buy a home in the future. This is an especially important issue for Bloomington due to the large number of rental units we have. I urge you to listen to the concerns of renters, including Indiana University students.

I like the idea of forcing taxing units to put large capital projects before the voters in a referendum. While some in government may grumble at this proposal, I believe it is appropriate to let the people paying the bills have a more direct say in what increases are acceptable and which are not. If a capital project is truly necessary, I believe the voters will see the need to pay more to get the services they want. Again bringing this back to local issues, I think it would be very interesting to see the results of a referendum on the proposed juvenile jail.

Unfortunately, while the governor's proposal has some worthy ideas, ultimately it is fiddling around with a broken system. I have believed for years that the property tax needs to be abolished. There was a time when property was indicative of wealth. That is simply not the case in today's society. A senior citizen living on a pension or Social Security may have paid off his or her home decades ago, but must still pay (and many times will struggle to pay) property taxes. An income tax, for example, will much more accurately measure someone's ability to pay.

One of the most common arguments for property taxes is that they provide a stable source of revenue. I believe this to actually be an argument against property taxes. In an economic downturn, the state and federal governments both face revenues that are below expectations while property tax revenue for local government is stable. When taxpayers are forced to make do with less, why should local government have a guaranteed revenue stream? Is it fair to expect homeowners and business owners to continue to pay the same amount in taxes while facing reduced income? Should not local government's main source of revenue fluctuate with the taxpayers' ability to pay? Stability of revenue may make it easier for people writing the budgets, but it is not fair to the people paying the taxes.

Making fundamental changes to the way local government operates and the way local government is funded will require great political courage. If this is going to happen, we need statesmen, not politicians. I believe the property tax crisis faced this year by homeowners all over the state provides a unique opportunity for a statesman to step forward and make needed reforms to bring Indiana's system of local government into the 21st Century. I urge you to support these reforms.