Tuesday, March 18, 2008

Getting their fix...

We’ve all seen it before. Maybe a friend or family member who really needs to give up tobacco, alcohol, or drugs. Try as they might, their addiction is so strong it overrides their good intentions. It doesn’t necessarily make them bad people, but their dependency hampers their ability to make the right choices.

Our state legislature just spent 3 months wrestling with the property tax mess, and you certainly have to give them credit for being creative. Their goal was to quiet the public outcry over sharply increased property tax bills, and they may have achieved that goal among some property tax payers, if only temporarily.

The legislation they just passed, limiting taxes to 1% of a homes assessed value, will supposedly cut the average homeowners tax bill by 30%. Of course that is based on your 2006 bill, which was likely more than 30% higher than your 2005 bill. And it won’t fully take effect until 2010, by which time your property’s assessed value may very well increase, followed closely then by your tax bill.

In their efforts to save money and placate a disgruntled public, our lawmakers also moved to eliminate elected assessors in some townships, replacing them with county assessors who will then hire other assessors to figure out how much your house is worth every time the state spends millions of your dollars on a reassessment.

In their efforts to meet the constitutional requirement that taxes be “fair and equal”, they have provided legislation that will allow neighbors living side by side in identical houses to pay a vastly different amount in taxes. A 65 year-old who makes $30,000.00 a year will pay less than a 65 year-old who makes $31,000.00 a year. A 65 year-old who makes $30,000.00 a year will pay less than a 25 year-old who makes $20,000.00 a year.

In the same “identical home” situation, a person that rents the home to another person would face tax increases double those of a person that lives in the home they own, and if they choose to operate a business out of that home, the tax increases could triple.

In spite of their efforts, our officials have failed with the current legislation to make property taxes equal, and regardless of any changes that might be made, they can never make property taxes fair. They are, by nature, a confiscatory tax. Even in the unlikely event that the legislature would agree to tax all property evenly, we could never escape the fact that if a person became unable to pay the taxes on their home, the government could seize their home and auction it off to the highest bidder.

Taxpayers can justifiably come up with many reasons to eliminate property taxes. Politicians have just one reason to keep them. Property taxes give the government its surest form of income. For politicians who are addicted to spending other peoples money, it the best way to assure they get their “fix”. While they may have shuffled some of the property tax burden to increased sales taxes and local option taxes, the largest portion of property taxes remain intact, and the cost to the taxpayers of operating the government continues to grow.

Governor Daniels has said this new legislation will make Indiana America’s best place to own a home or business. If we really want to do that, we need to eliminate property taxes altogether. Libertarians have presented plans to do just that. Unfortunately, those plans involve reducing government spending, and that sends our current legislators into withdrawal.

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