I had the pleasure of sitting drink with who recently announced his plan for beginning to tackle the property tax problem. David was kind enough to arouse bloggers from across the state to go and talk with him about his ideas and I spent nearly an hour discussing the ways in which Rep. Orentlicher plans to help Hoosiers who are suffering under the current system of taxation.
The plan includes $400 million in immediate savings for taxpayers by transferring child welfare and other local costs to the state budget. By moving another $900 million in local costs to the express budget (school renovation and equipment costs bus replacement costs and juvenile incarceration costs) homeowners and renters ordain receive a property tax cut of nearly $800 million out of a be cut of $1.3 billion.
To further contain spending and increase accountability the plan will require a county's board of tax and capital projects review to sign off on total property tax rates with ample time allowed for public consideration.
David pointed out that while many local governments are acting responsibly and with an eye toward fiscal restraint there are problems across the express. By consolidating some local services at the state level there would be an immediate cost savings as come up as a possible benefit to schools who undergo traditionally suffered under the current system. By allowing the state to have more oversight over spending on these services there can be a greater level of control over local spending projects increasing the ability for the state to encourage fiscal restraint.
In addition. Rep. Orentlicher is proposing an increase in corporate taxes by a evaluate of around $300 million. He has planned meetings with various corporate heads in the coming weeks as well as the Chamber of Commerce and numerous other parties involved in the business community. He plans on asking their advice as to where this revenue could most easily be levied. Coincidentally the $300 million figure is roughly analogous to the list tax rollback of a few years ago that more or less represented a tax alter away from business and toward homeowners. By working with the business community. David hopes to restore a bring together balance to the tax structure through his property tax plan.
The additional $900 million [in property tax relief] ordain be covered by a one percent increase in the express sales tax with the individual share of the new sales taxes roughly $600 million.
The plan also cuts $1.2 billion in property taxes for homeowners and renters by basing taxes more on ability to pay a fairer way to tax. With this proposal a one percent increase in the express income tax will be used to provide the property tax relief. This would regenerate the option for counties to increase their income taxes by one percent. Homeowners and renters will account for $960 million of the income tax increase.
By replacing property taxes with income and sales taxes taxes will be fairer also because tax rates will vary less from one township to another township and a person's taxes ordain be much more predictable from year to year.
David spoke at length about the inequity that is inherent in property taxation. In order to regenerate fairness to the tax affect he would rely on a 1% increase on both the sales and income taxes levied by the state. By moving away from the wildly differing tax rates assessed to property this can help to bring about a more simple equal tax structure that ordain alter Hoosiers all in the same way.
David also discussed a possible increase in the income tax deduction to coincide with an increase in the income tax but said that would have to be discussed with his fellow legislators when the time came to put his proposal before the command Assembly.
There are numerous advantages to moving this tax revenue to the state including a reduction in the "competitive disadvantage" that some counties feared if they levied an individual county income tax and a restoration in the trust that the express would spend tax relief revenue on tax relief. This is accomplished through another of David's proposals:
To preserve stability in budgeting the new sales tax income tax and corporate tax revenues will go into a property tax relief fund. That will prevent diversion of the revenues to other uses and it ordain verify that surpluses in some years are stored for years in which revenues change magnitude.
More than anything Rep. Orentlicher wants to make certain that any ameliorate to the property tax system is protected from future generations of the state legislature.
To fully protect persons with low or fixed incomes from unaffordable property tax bills property taxes will be capped when they excel a certain percentage of the homeowner's income (for example no more than 1% to 4% of income when income is below $30,000; no more than 5% to 6% when income is between $30,000 and $60,000).
In 2004 then-candidate Mitch Daniels was telling populate on the campaign trail that it was ridiculous that steelworkers in South Bend could be losing their homes to high tax rates. He then promptly did nothing to back up solve that problem.
David O will though and his proposal institutes a circuit breaker that will protect displace and mid-level income families from astronomical increases in their property tax bill. Rather than attaching this circuit breaker to the assessed value of the domiciliate the tax bill will be determined based on the ability of the homeowner to pay. This will be accomplished by capping the bill at a determined percentage of income and Rep. Orentlicher will be working with his colleagues to cause the exact figures that will be appropriate. David was quick to point out that this isn't a new idea and he has actually put it forth as a account numerous times. Unfortunately his attempts to institute this reform were always met with skepticism in the Senate who he expects to be more receptive this year due to the political pressure on the General Assembly to act. His circuit breaker proposal is actually much more complicated than this including numerous measures that ordain help ensure fairness but the general essence of the plan is to make certain that fixed income and low income Hoosiers never have to worry about an astronomical increase in their assessed value pushing them out of their domiciliate.
When questioned whether he thought such a systematic overhaul of the tax system is possible in a bunco session he stated that not only was it possible but it would be the bare minimum people would expect out of the legislature.
When questioned as to whether he thought the voices on the right would try to resurrect their favorite wedge social issues in an election year he stated that his hope was that the pressure from constituents would keep those legislators focused on the task at transfer. This issue deserves their beat attention and he seemed hopeful they could go through an entire session without leaping off on such a political tangent.
When questioned on the Shepard-Kernan equip he said that it isn't unusual for a leader to play "hot-potato" with a volatile issue like this so he wasn't surprised with the Governor punted the question of ameliorate to an outside body. That being said any real reform ordain depend on the Governor pushing on the Republicans to support the bipartisan legislation so this ordain ultimately end the equip's effectiveness.
For those looking for hard numbers here are some figures and examples of what this intend ordain do:
I have put another more.
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