Priority of the public

The state of Indiana is about to take even more power from local governments — and in doing so, it will stifle potential economic progress all while leaving vital public services to rot away.

If you are an Indiana voter and plan on going to the polls on Nov. 2, you will have the opportunity to answer Public Question #1. You will have the opportunity to turn down the Indiana Property Tax Cap Amendment.

If you think that “all property ought to be treated alike and taxes should not be shifted to households from businesses ... If you believe that local government services are the foundation of your community’s well-being,” as IU lecturer Morton Marcus writes in his column, then please, please vote “no.”

At first, no doubt, a property tax cap must sound desirable to a Hoosier homeowner, but it is no cure, and its side effects are acute.

You might recall the sales tax rising from 6 percent to 7 percent in 2008 after a property tax abatement was approved prior to 1978.

At that time, revenue from property taxes was used for education, but the cap led to the sales tax, with its scanty increase, funding schools instead. This has led to schools being underfunded, especially now that spending has decreased because of our current recession.

But education isn’t the only area hit by tax caps. Shrinking revenue for local governments leads to cuts everywhere, including the police, the fire department, public libraries, sanitation and all other areas of local service.

Supporters of the tax cap claim it will only make local government more efficient, even suggesting levels of government such as townships could be wholly eliminated.

Really? Although our local government, similar to any other level of government, never runs perfectly, it is the foundation of communities and already must desperately scrounge for possible revenue — revenue that supports the services you enjoy daily.

Yet state legislators remain apathetic while the lower levels struggle.

It is unlikely the caps would actually benefit your wallet. With local government searching out alternative revenue streams, local option income taxes are levied on households alone, as state government has not given the local level power to tax corporations.     

As Marcus points out, “A reduction in property taxes is enjoyed by all property owners, but paid for exclusively by households.”

There have also been some surprising findings considering the business tax rates are set at three times the rate for homes. Professor Larry DeBoer of Purdue University found that since its passage in 2008, nearly 50 percent of the relief has gone to apartment owners and 22 percent to businesses, while only 28 percent has gone to homeowners.

This is, in part, due to the fact that because most homeowners currently pay property taxes much lower than the 1 percent tax cap. So while all will forever pay a 1 percent sales tax hike, most people will not benefit.

If approved, these caps become part of the state constitution. So take a walk around your community. Do you enjoy the benefits of the local library branch, the security of a ready police force and fire department and value quality education (which will truly spur economic growth)?

Then for the good of the public, vote “no” on Public Question #1.


E-mail: celgrund@indiana.edu