Friday, January 25, 2008


On Thursday, the Indiana House approved Governor Daniel's property tax cap plan by a vote of 93-1. The plan now moves on to the Republic-controlled Senate. Key components of House Bill 1001 include:

1) Tax bills will be capped at 1 percent of assessed valuation for homeowners, 2 percent for landlords and 3 percent for businesses. These tax caps would begin in 2009.

2) School and welfare costs will be shifted from property taxes to the state. The state will increase sales tax by a penny from 6 cents to 7 cents to pay for these swaps.

3) Voter referendums will be required on local construction projects; school classroom buildings will be exempt. Non-educational projects such as swimming pools and athletic facilities will
still require a referendum. Democrats tacked on this amendment exempting school classroom buildings on Tuesday night.

4) Annual local government spending will be limited to the average growth in county personal income--2.9 percent in Lake County and 4.6 percent in Porter County.

5) Township assessors will be eliminated. All tax assessments will now become the responsbility of the county assessors.

6) Property taxes will be frozen for those seniors whose homes are worth $200,000 or less and have an annual income below $35,000 for singles or $50,000 for couples.

7) State income tax deduction for renters will be increased from $2,500 to $5,000.

8) Earned income tax credits will increase from 6 percent to 9 percent.

House Minority Leader, Brian Bosma, R-Indianapolis, did express concern over the amendment exempting school classroom buildings. School construction debt in Indiana accounts for a higher portion of school tax dollars than the national average.

Despite dozens of amendments being attached to this bill and a marathon floor session in the House on Tuesday night, the key components of Governor Daniels' tax plan remained intact.
House Bill 1001 will now go on to the Senate for approval.

Tuesday, January 22, 2008


The Journal Gazette in Ft. Wayne offers us an excellent editorial on ethics (actually lack thereof) in the Statehouse. This editorial is a MUST read.

Here are the ethics bills currently being shunned by Indiana's greedy lawmakers. We like HB 1063.

Senate Bill 59: Reduces from $100 to $25 the minimum reportable amount for total daily gifts to a legislator or a legislative employee given by a registered lobbyist or a single gift received by a legislator or legislative candidate.

Senate Bill 165: Provides that an individual who has served as a member of the General Assembly may not register as a legislative branch lobbyist during the period that ends one year after the date the legislator leaves.

House Bill 1063: Provides that a member of the General Assembly, a candidate for a legislative office, an officer or employee of the General Assembly or a member of the immediate family of any of those individuals may not accept a gift from a lobbyist. Provides that a lobbyist may not give a gift to any of these persons. Provides that violations of any of the prohibitions on giving or accepting gifts is a Class B misdemeanor. Provides that an individual who has served as a member of the General Assembly may not register as a legislative branch lobbyist during the period that ends two years after the date that the individual ceases to be a member.

From Hoosiers for Fair Tax
Tuesday, January 22, 2008


Why is it that hard hitting journalists like Abdul Hakim Shabazz ignore these questions? Why is the media afraid to ask our lawmakers why they do not follow the law?

We believe that surely in the entire state there is a journalist pure enough in ethic to ask these tough questions of our legislators, governor, and policy makers:

1. What percentage of our property tax dollars is used to secure bond debt? (Hint: it is many times greater than what is being spent on township government.)

2. Who authorized citizens’ homes (property taxes) to be used as collateral (without consent) against the state’s bond debt? Who is responsible for this oversight of the rule of law?

3. Which bond banks are writing loans that guarantee repayment with our property as collateral without signed disclosure documents?

4. How much money does the state have off budget according to the CAFR (Comprehensive Annual Financial Report)?

5. Where is our off budget money kept and how much interest does it draw?

6. Who prepared the CAFR in its current format?

7. Why was the format of the CAFR changed?

8. Why does the CAFR appear to be purposely prepared so that no one clearly understands it?

9. Why are our politicians are not obeying the Indiana Constitution which states:

Article I, Section 22, of the Indiana Constitution: FORBIDS the seizure and sale of homes for payment of taxes. Article 8 taxes only corporate property, not personal property, for public schools. Most of what Indiana government now does is clearly forbidden by both the Indiana and federal constitutions our politicians swear to uphold and be accountable to the rule of law.

Do you think it could be that the REAL culprit, the REAL reason they want to ignore property tax repeal is because that politicians have illegally used our homes as collateral against bond debt?

It is OUR government and it is OUR job to oversee it. It is the job of an ethical press to be part of the checks and balances of our liberty. It is time for the media to do their job.

From Hoosiers for Fair Taxation
Tuesday, January 22, 2008

Blunt Proof of the Feasibility to Permanently Abolish Property Tax

Media Contacts:
Melyssa Donaghy 317-938-8913
Max Katz 765-409-6669

Hoosiers For Fair Taxation, Senator Delph, Representative Noe, Representative Elrod and many other legislators along with Stop Indiana, attorney John Price, Eric Miller's Advance America, and the Statewide Taxpayer Alliance know that property tax abolishment, without substantial increases in sales tax and income tax, is realistic and possible. The economist Dr. Bill Styring's 2/2/2 Plan demonstrates that the state of Indiana can completely replace property tax without changing the state's current spending habits.

Dr. Styring's plan does not account for positive changes in Indiana's economy that will undoubtedly follow the elimination of property tax such as heavy real estate investment and increased consumer spending due to increased statewide disposable income. The real estate investment in Indiana alone would cause such an economic boom that it could likely end our abandoned property and foreclosure crisis. Property tax elimination would also likely cause a surge in Indiana's population as more people locate to Indiana to take advantage of real estate purchase opportunities without the burden of property tax. With the population surge would come more sales and income taxes.

The General Assembly does not have to adopt a specific plan until the year 2011. In the meantime, we recommend that the General Assembly approves the 27steps outlined in the report prepared by the Sheperd Kernan commission. While the Governor's commission cannot forecast the savings to the state once the plan is implemented, there is no doubt that the savings would be substantial--perhaps equivalent to the the entire property tax burden currently placed on Indiana's homeowners because our legislators have not had the political will to liberate Indiana's governing structure and her taxpayers from the 19th century.

Our citizen networks will work to replace all legislators who do not support property tax repeal in the November 2008 election.

The 2/2/2 Plan, to replace property taxes in Indiana based upon the latest revenue forecast (07/08 fiscal, estimate):

1) Current IN sales tax (state level rate of 6%): $5.601 billion2% increase would yield an additional $1.867 billion

2) Current corporate profits tax: ~$2 billion

2% increase would yield an additional $.286 billion ($286M)

3) A 2% statewide average of the COIT would yield $2.705 billion to cover local civil units of gov.

By adding these three together ($1.867 billion + $.286 billion + $2.705 billion), a total of $4.858 billion is realized; enough revenue to replace property taxes.

Indiana has a 70-plus year history of attempts to lower property taxes by raising other, non-property taxes. In every case these have failed miserably. The new taxes, or higher rates on old taxes, remain in place. And, in short order, property taxes rise back to their old levels, poised to roar even higher.

--1933. General Assembly imposes two new taxes: an individual gross income tax and a corporate gross income tax. The morgue of the Indianapolis Star indicates that the political leadership at the time said this was for property tax relief (1933 was the pits of the Great Depression, and people were losing their homes. Home prices declined by over 40% in the 1929-1933 period). Property tax relief was nonexistent. The state used the money to bail out the state's own finances.

--1963. General Assembly imposes a new sales tax at a rate of 2% and changes the 1933 individual gross income tax (from 1933) to an adjusted gross income tax (the one we have now) at a rate of 2%. Again, the ostensible reason was for property tax relief and again little PTR was forthcoming.

--1967. Those 1963 tax changes were raising more money than projected. The GA decides to give back 8% of sales and income tax revenue to local government for property tax relief. Local units spent the money. No PTR.

--1973. Gov. Otis Bowen launches the most determined PTR offensive yet. The sales tax goes to 4% and a new corporate supplemental net income (profits) tax is imposed. Strict property tax levy controls are imposed. It works... for a time. By 1980, property taxes adjusted for inflation are some 30% lower than in 1973. When Bowen leaves office the levy controls are relaxed. By the end of the decade, property taxes (adjusted for inflation) are back to 1973 levels. The doubling of the sales tax rate from 2% to 4% remains in place, along with the new corporate SNIT.

--2002. More fiddling with the sales tax in the hope of property tax relief. The results of this are obvious, or we wouldn't be debating the current property tax mess. All of this suggests that unless the property tax is totally ripped up by constitutional amendment, the assessment and collection mechanism dismantled, it will grow back. The PTR-inspired hikes in other taxes remain. That is our history. It is a terrible deal for taxpayers.

2. A vote in the 2008 legislative session for a constitutional amendment to repeal property taxes does not amend the constitution. It merely starts the amendment process. Amendments must be passed by two consecutively elected General Assemblies, then submitted to a referendum. Thus any amendment passed by the '08 Assembly must be passed by either the 2009 or 2010 legislatures, then submitted to the voters at the 2010 general election. The General Assembly does not need to decide on a "replacement revenue" package until the 2011 session.

3. What might such a "replacement revenue" package look like? The particular answer will come from the 2011 General Assembly and cannot be determined now (if for no other reason than forecasting state level taxes and property taxes out that far would be a most unreliable exercise. No one need be locked into any particular plan just yet. However, as an illustration that a replacement plan is feasible and less scary than many fear (we don't need to be talking about a 12% or 13% sales tax ... in fact, we should not be), consider just this one possibility.

Local sales taxes are generally very bad policy, for a whole host of reasons too numerous to mention in this short sketch. Sales and corporate taxes are best levied at the state level. It happens that roughly a 2% increase in the sales tax and a 2% increase in the corporate profits tax roughly take care of school propertytaxes. The loss of local control by the state assuming school property taxes is minimal. About the onlylocal control left is on building projects.

For local civil units, a statewide average increase in the individual adjusted gross income tax of about 2% suffices to replace local civil government property taxes, higher than 2% in some units, less than 2% in others.

Thus, a "2-2-2" plan~2% sales and 2% corporate profits at the state level for schools and a 2% average on personal income taxes for civil units—is about what would be needed. This is merely a ballpark projection to 2011.

There may be better plans, it's really a policy question for the General Assembly: do you want to make the trade of something like this in exchange for no-property-taxes-forever-on-anything? Everyone understands "zero."

4. Are there "practical problems? Of course. The two identified are how to make the civil government transition from a property tax base to an income tax base, and how to handle debt backed by property taxes. Without elaborating, the former can be handled using locator software (Map quest-type programs). The debt problem might be handled by treating the current state paid PTRC's as in lieu of property taxes (which they are) and paying PT-backed debt service from each unit's own PTRC.

Conclusion: Total elimination of the property tax via constitutional amendment is the only way to give property tax relief that will stick. The other tax action necessary to achieve this goal—in 2011-are large but not so scary as "a 13% sales tax." They are feasible. The question is for the General Assembly. Are we going to once again go down that 70-odd year path of failed PTR policies or are we going to rip the property tax up by the roots?

Posted by Hoosiers For Fair Taxation on Friday, January 4, 2008.