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Property Tax Cap “Test” Fails

If today was a test vote of property tax caps in the Indiana House of Representatives, it failed.

Lawmakers, primarily along party line votes, turned back an amendment that would have put constitutional property tax caps on the November 2010 ballot.

House Republicans tried to attach the measure to HJR 6, which would combine the State Auditor and Treasurer’s Offices.  However, the amendment was not allowed by the Speaker as it was not considered germane.

A vote to overrule failed by 50-45.

Now while the vote was procedural in nature, it did provide some insight as to how difficult it will be to get the caps through the House should it ever come up for a vote.

  • Daw-g

    Pat Bauer is a nasty, extremely crazed partisan hack and obstructionist. Shame on the morons in SB who keep putting that slob back in office.

  • Taxpayer 834512

    I like the people of this state. God knows they’re close to reality than the coasts. But, it’s like we’re in a lost episode of ‘Wagon Train’: You jus’ got to have ol’ Clem down at the poor relief nearby, so’s yer sure you’ll get a check. Sales tax manages to get raised lickity-split. But, Whoa, I say, I say, Who-o-a there pardner! What you in such a hurry for that property tax cap? Whyyyy we might justa need that money for folks what’s need it more than you. You let US figure that one out, pardner.
    .
    Eliminate property taxes? Regulate hiring of illegal workers? Lobbyist reform? Then you’re asking them to go from ‘Wagon Train’ to ‘Star Trek’.

  • IndyErnie

    It’s time for the tax protesters to call on the State House, anything less and the caps will fail.

  • mike

    Ok, so procedurially reintroduce it without the amendment…. duh…

  • http://blog.masson.us Doug

    I was reading the text of the proposed constitutional amendment, and it appears not to contain a time frame for the tax calculation that is capped. Basically, it says “property tax is capped at 1% of assessed valuation.” But I don’t think it specifies over what period that cap calculation is to be made — presumably, but not explicitly, 1% per year. I think it can be read to be 1% over the lifetime of the taxpayer or, less likely, 1% per day.

    If we’re going to put it into the Constitution for ever and ever, we should probably get it exactly right.

  • Dave

    There are some fine thinkers & communicators who frequent this blog. Those of you who favor caps should explain exactly how they work for the CITIZENS, no circumlocution or vomitribe. Caps have not been demonstrated to be anything other than a commission schedule. Let’s have a GA proponent demonstrate on a piece of paper, chalk or marker board (anything!), exactly how caps benefit, not government, but a real live citizen, in bottom line, dollars & cents terms. That’s not asking too much. Many of these same folks also declined last year, to demonstrate or identify, the “numbers” that they “couldn’t make work,” in any of the repeal scenarios. Why all the clamor for public support when they can pass this stuff in a budget or appropriations bill? The could always send it to a summer study group… Citizens know the difference between the CYO & CYA.

  • Gene

    First, I’m in favor of shrinking government. I’m still paying on two Colts stadiums, plus all the teachers in this county make way more than I do. And now the Simons want a Pacers Bailout.

    Second, the tax cap is stupid. Rich people’s taxes are capped at 1% while poor people in rentals pay 2% ? It’s regressive and racist.

    (Please don’t chime in and say people who rent don’t pay property taxes. Landlords write the check for the taxes, yes, but it’s the renters that really pay the bill.)

  • JW

    Racist? That assumes all rich people are white and all poor people are some ethnic minority. Indiana has 6.3 million residents of which 85.7% are white and 14.3% are an ethnic minority. Roughly 550k are black, 300k are latino, 150k are “some other race” and 80k are Asian. 72.1% of the housing in this state is owner occupied (1.76 million), while 27.9% is renter occupied (683k). It is virtually impossible for that “racist” claim to be true if you do the math. While we know that there is still racism in America, throwing out unfounded claims like Gene did is a tremendous disservice to those who actually have been directly affected by racism.

  • Gene

    JW – I have a degree in math, a subject you must have flunked.

    The benefit from the cap in taxes – 1% for owner-occupied vs 2% for rental properties – clearly benefits the owner-occupieds, a population that is far more white than the renters.

    Example – if 95% of residences in the state that are owner-occupied are owned by white people, and only 70% of rentals are occupied by white people, the disproportionate impact is that non-white people will pay more as a percent.

    Sheesh, try to keep up.

    If you think that taxes on Mitch Daniels new $10 million mansion being capped at 1% while some poor Hispanic family in 46201 has to pay 2% is *fair*, you need to reconsider the meaning of the word fair.

  • http://none Mauri

    REPEAL property taxes and replace the revenue with a consumption(sales) tax on services. I guestimate that this tax along with the current 7% sales tax could provide as much or even more than the current sales and property tax and at a reduced rate of 3%.

  • John Howard

    Gosh Gene, you forgot the businesses paying 3% which are majority white-owned (isn’t that why we have the special designation of ‘minority-owned’ with special tax breaks, to close the gap?), so what about them? Kinda blows a hole in your math.

    Maybe it’s simpler than you think and the individual taxpayer who has worked, saved and scrimped to own and pays to maintain their home is the one getting the 1% advantage.

  • Think Again

    JH: the biz cap at 3% doesn’t blow a hole in Gene’s argument…but don’t look for logic from the General Assembly.

    Gene’s theory makes more sense than anything I’ve read on this subject. I’m a lover of the Constitutions–state and federal. Amending them should be difficult. For marriage, for taxes, for anything.

    This property tax mess has more moving parts than an the internal combustion engine. The engine needs a complete overhaul. An Amendment is kinda like barring GM or Ford from participating in the engine’s overhaul.

    Attack spending, and there you have half the battle–and the half you can control today. Eliminate township government. Force schools under 2,000 students to consolidate with their nearest larger neighbor, for operating administrative efficiencies (I know with schools, that’s somewhat oxymoronic, but it’ll work to a large degree). We have history on this…consolidations were somewhat-forced in the late 60s, and for the most part, it’s worked very well.

    Force fire departments in this county to merge. Tell all those wigged-out trustees to get gainful employment. They have no business being a pseudo fire chief. In fact, it’s kind of creepy.

    Yeah, governmment would be a little more removed from me. But I can travel from my township government center on Post Rd. to the city-county complex…it takes about 15 more minutes. Big freaking deal.

  • patriot paul

    All the hysteria over caps or no caps. You will still be leasing your home to the government and held hostage for their annual ransom. Nothing will change because the government will continue using your home as collateral at the bond bank and can foreclose and auction it for failure to pay. These lawmakers only want to debate what kind of lube to offer and have you believe it will solve everything. Miss Piggy and Kermit the Frog will end this muppet show in April and still have Hoosiers in shackles because they figure we enjoyed the lube job. After all, we attended the show last year, got the media’s applause but keep re-electing the same thugs. You expected something different besides hype?

  • JW

    While a personal barb back at you would satisfy my internet ego, I’ll just say that we’re both right since we’re talking different numbers. You’re talking in terms of percentages relative to specific populations while I’m speaking in terms of raw numbers on the whole or actual people. Whether it’s the number of people in poverty or living in apartments, there is no way that the total number of minorities can be greater than the number of whites; the math is impossible given the relatively low number of minorities in this state.

    $100k in prop taxes for a $10mil mansion versus $1k for a $50k rental home/apartment that most likely won’t be improved upon or contribute positively to the local property values among other things actually seems fair to me. Home ownership and all the long-term positives surrounding it (community cohesion, etc.) are being rewarded by the Indiana property tax code just as they are in the Federal income tax code. Any argument about fairness is purely subjective and none of the political parties can define it well enough to settle the dispute, so I guess we’ll just have to agree to disagree.

  • Taxpayer 834512

    I’m onboard with (my perception) of TA’s argument, “Just reduce the spending, Stupid”. Unfortunately, whether Bush, Obama, Washington Township, or any zillion examples we can cite, reduced spending seems akin to electocution for public servants. Therefore, we grudingly go along with stuff like term limits, property tax caps, and other crutches we have a bit of hope in, versus the abysmal status quo or things that aren’t happening without pitchforks, torches, & probably gunfire. With our country tipping to those who receive a gov’t check vs those who don’t, are elections to be an economic solution any time soon?

  • Tom

    Your ALL missing the point! We need ANYTHING that reduces taxes! Period! This cap will reduce property taxes in a way that will make it hard to change! Take it! Take it! Take it!

    We are being taxed to death!

  • matt

    Unfortunately Gene, property taxes do not get passed along to the tenant as you suggest. Rental homes have become increasingly more competetive. Landlords are effectively having to lower rents and pay insane property tax increases as well as lose property market value/equity due to the PT increase. Landlords are getting screwed. I know because i'm one of them. I have a home in Wash twnshp/IPS school district. Rent has been $950 for the last 8 years. My property tax has gone from $100/month to $300/month. Just because I need $200/ month in rent does not mean I can rent it for that. Supply/demand deal. So I eat the $200 a month. I didn't make any profit before. Now I am an extension of the county providing affordable housing and losing $200/month. That tax increase of $2200/year also affected the market price of the home. Any buyer will have to take into consideration the PT cost. How much does $200/mo buy you in mortgage. So I did have a house worth $150K and broke even each month. Now I have a house worth about $125K and I lose $200/month. I agree with the unfairness of the 2% cap, but your assumption that the tenant suffers is woefully inaccurate.

  • matt

    Unfortunately Gene, property taxes do not get passed along to the tenant as you suggest. Rental homes have become increasingly more competetive. Landlords are effectively having to lower rents and pay insane property tax increases as well as lose property market value/equity due to the PT increase. Landlords are getting screwed. I know because i'm one of them. I have a home in Wash twnshp/IPS school district. Rent has been $950 for the last 8 years. My property tax has gone from $100/month to $300/month. Just because I need $200/ month in rent does not mean I can rent it for that. Supply/demand deal. So I eat the $200 a month. I didn't make any profit before. Now I am an extension of the county providing affordable housing and losing $200/month. That tax increase of $2200/year also affected the market price of the home. Any buyer will have to take into consideration the PT cost. How much does $200/mo buy you in mortgage. So I did have a house worth $150K and broke even each month. Now I have a house worth about $125K and I lose $200/month. I agree with the unfairness of the 2% cap, but your assumption that the tenant suffers is woefully inaccurate.

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  • Anonymous

    Tom’s right that everyone is missing the point….but his point is just as invalid.

    First off, placing a tax cap in the CONSTITUTION is just absurd. It’s a tax-shift, not a tax cap, and making it Constitutional is a major mistake. It sets Indiana up for future failures and budget shortfalls. To make up for the lost property taxes, other taxes will go up, like sales taxes. It’s a diversion of burden onto the agricultural and rental sections of the local economy.

    Second, property taxes depend upon assessment. The Indiana Constitution says “true tax value does not mean fair market value.” I’ll let that one speak for itself….

    Because the economy is recently recovering from recession (not saying you feel it yet), property taxes could dramatically change in proportion to assessments in just a couple years… basically tax caps would be enacted (Constitutionally) with the assumption that all services in the state will remain at constant cost while the surrounding housing (and other) markets ascend.

    It’s basically a reliance upon the knee-jerk reaction to the word “taxes.” Everyone hates the “idea” of taxes, but everyone loves to see that Ambulance or Firetruck coming to save their family when they’re in trouble….

    There is no need to enact this Constitutionally. It looks good…if you don’t understand the consequences….

    Indiana has many rural counties….I live rurally, and have personally seen (and felt) the consequences of school consolidation and cutting public services. It can RUIN a town.

    Hoosiers need to stick up for Hoosiers. Do some research before you vote to make a recession economy the permanent economy.

  • Dave

    BPA: Though the election & referendumb are two weeks away, it’s surprising to see anyone paying attention to “tax caps;” considering the taxpayer funded, bobble headed “yes” campaign, ‘n all.

    Caps are little more than a mesh condom; hardly protection, for those taxpayers who understand what they’re really getting…

  • John Howard

    Again the silly ‘fairness’ argument is dragged out and flogged in public. So it’s ‘unfair’ that someone who’s taken the risk of buying and maintaining a home gets more of tax break than someone who does NOT own their home.

    Sorry, but it’s only unfair if the same opportunity isn’t made available to all, and this tax differential is. Anyone who gets their priorities right, manages their finances and if need be improves their education/skills and seeks a better paying career can own their own home.

    Whining about ‘fairness’ is an entitlement cop-out.

  • Jhays

    The insidiousness of sneaking in the three percent “Personal Property Tax”, is simply the return of the “Inventory tax”. Only, this time, everyone gets dinged! It is also interesting to see the “Happy Hour Mafia” clubs which are involved in the endorsement of this. In the end, they will have made the gun and loaded it. But it will be those who vote yes who will have put it to their own heads and, pulled the trigger. I’ll give it until the May and November bills in 2012, before the scorched cat orchestra reignites.

  • Jhays

    The insidiousness of sneaking in the three percent “Personal Property Tax”, is simply the return of the “Inventory tax”. Only, this time, everyone gets dinged! It is also interesting to see the “Happy Hour Mafia” clubs which are involved in the endorsement of this. In the end, they will have made the gun and loaded it. But it will be those who vote yes who will have put it to their own heads and, pulled the trigger. I’ll give it until the May and November bills in 2012, before the scorched cat orchestra reignites.

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