Tuesday, December 03, 2013 12:22 PM
By LARRY DeBOER
LAFAYETTE -The Indiana General Assembly may consider eliminating
property taxes on personal property in the upcoming session. Personal
property is almost entirely business equipment. Eliminating this tax
could encourage more business investment in Indiana, especially since
some of our neighboring states have already eliminated this tax.
property owners pay about a billion dollars in property taxes to local
governments, which is 16 percent of total property taxes. Eliminating
this tax would create some big tax and budget issues for legislators to
consider. Here's why.
Indiana limits the revenue that local
governments raise from the property tax. There's a maximum property tax
levy restricting most local government operating funds. The maximum levy
increases from the previous year's maximum based on a state formula.
Most of the levy does not depend on changes in assessed value.
we eliminate personal property from assessed value, total assessed
value would be smaller. We calculate property tax rates by dividing the
levy by assessed value. With the levy limited and assessed value
smaller, most tax rates would go up. Personal property owners would pay
less, but higher tax rates would shift this tax burden to everyone else. Or
taxes would shift, except for the property-tax caps. Indiana's
constitutional tax caps limit homeowner tax bills to 1 percent of
assessed value before deductions. The caps limit rental housing, second
homes and farmland taxes to two 2 percent of assessed value and business
land and building taxes to 3 percent.