"IT IS THE DUTY OF THE PATRIOT TO PROTECT HIS COUNTRY FROM THE GOVERNMENT." - THOMAS PAINE (1737-1809)


Saturday, February 14, 2009

PAY ATTENTION TO THESE TWO BILLS

In an earlier post, we wrote about Senate Bill 479 (Bill 1660 is the House's version) that would create regional transportation districts in every Indiana county.

Senate Bill 479 reads as follows: permits counties to establish a regional transportation district to plan, design, acquire, construct, enlarge, improve, renovate, maintain, equip, finance, operate, and support public transportation systems. Establishes a fee on vehicle registrations, and permits the creation of allocation areas, the establishment of a special allocation of county option income taxes, and the imposition of a food and beverage tax, a county economic development income tax, or a special benefits property tax to provide funding to regional transportation districts. Permits other public transportation agencies to merge into a regional transportation district. Requires the governor to appoint a deputy commissioner for the department of transportation to assist the commissioner with the public transportation responsibilities of the department. Current Status:

Did you pay attention to the sentence that was highlighted?

Each county RTD will have the power to enact income and food and beverage taxes, a special benefits property tax and a vehicle registration fee. They will have the power to enact these fees and taxes, and there will be no one to stop them. They will have absolute unlimited power in their quest for RTD money.

The members of a county's RTD board will be made up of local elected officials. Not average citizens like you and me but Lake County elected officials. Talk about the fox guarding the henhouse!

The RTD board will make decisions that will affect everyone living in Lake County. Do you want a county option income tax? Do you want a food and beverage tax? Do you want to pay a vehicle registration fee? Haven't you had enough with the property taxes in Lake County?

Why should the RTD have this kind of power to tax and spend at their whim and without any taxpayer recourse?

The two RTD bills are Senate Bill 479 and House Bill 1660.

Start calling, e-mailing or writing your state representatives and senators. Tell them you oppose Senate Bill 479 and House Bill 1660 because it is not in the best interests of the taxpayers, and it gives unlimited power to a board without any checks and balances.

Listed below are the telephone numbers and e-mail addresses for our local state officials:

Phone numbers for the House of Representatives are: 1-800-382-9842 or 1-317-232-9600.

Phone numbers for the State Senate are: 1-800-382-9467 or 1-317-232-9400.

Linda Lawson, State Representative, District 1
h1@in.gov

Earl Harris, State Representative, District 2
h2@in.gov

Charlie Brown, State Representative, District 3
h3@in.gov

Ed Soliday, State Representative, District 4
h4@in.gov

Dan Stevenson, State Representative, District 11
h11@in.gov

Mara Candelaria Reardon, State Representative, District 12
h12@in.gov

Chet Dobis, State Representative, District 13
h13@in.gov

Vernon Smith, State Representative, District 14
h14@in.gov

Don Lehe, State Representative, District 15
h15@in.gov

Shelli VanDenburgh, State Representative, District 19
h19@in.gov

Frank Mrvan, State Senator, District 1
s1@in.gov

Lonnie Randolph, State Senator, District 2
s2@in.gov

Earline Rogers, State Senator, District 3
s3@in.gov

Karen Tallian, State Senator, District 4
s4@in.gov

Ed Charbonneau, State Senator, District 5
s5@in.gov

Sue Landske, State Senator, District 6
s6@in.gov

If you like the idea of more taxes, then do nothing and you will get your wish.

However, if you are against any new taxes and fees, then now is the time to contact the above officials (and the governor, too) and tell them "NO" to Senate Bill 479 and House Bill 1660 and "NO" to any new taxes until they get their spending under control.

The choice is yours.

Blunt Proof of the Feasibility to Permanently Abolish Property Tax

IMMEDIATE RELEASE
Media Contacts:
Melyssa Donaghy 317-938-8913
Max Katz 765-409-6669
www.HoosiersForFairTaxation.com

BLUNT PROOF OF THE FEASIBILITY TO PERMANENTLY ABOLISH PROPERTY TAX.
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.

PROPERTY TAX HISTORY PREPARED BY DR. BILL STYRING
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.