Setting the Record Straight on Businesses and Property Taxes

July 27, 2007

Anonymous The Greensburg Daily News Fri Jul 27, 2007, 12:46 AM EDT

Misinformation has fanned the flames in our state’s ongoing property tax crisis. It’s not a battle of businesses vs. homeowners. Everyone is in the same boat, the same broken boat that is rapidly sinking. Too often though, attention is misplaced on the convenient notion that “businesses don’t pay their fair share of taxes.” Reality tells another story.

Indiana is among the top third of states for business property taxes, while Hoosier homeowners’ percentage of property taxes paid ranks in the bottom third of all states. In fact, business property represents only 35 percent of Indiana’s total property assessments and homeowners comprise 65 percent; nevertheless, businesses pay more than 50 percent of all property taxes.

The elimination of the state’s tax on inventory has been a focal point of “what went wrong.” When the inventory tax repeal passed the 2002 General Assembly, measures were provided to protect homeowners, but it was up to each county to act. Counties were encouraged to eliminate the inventory tax early – before 2007 – and to implement a homestead credit in order to negate any shift in taxes to homeowners from an inventory tax elimination that has helped secure thousands of new jobs throughout the state.

Ratification of the inventory tax repeal was on the 2004 general election ballot and passed with more than 70 percent of the vote statewide. So, all counties were well aware it was coming. Yet, only 43 of Indiana’s 92 counties took steps to protect their homeowners. The remainder did not.

Going forward, for the sake of -all taxpayers, what must be examined is the property tax burden itself. What we need is a complete overhaul of the assessment process and to get the assessments right, and then we can determine where the spending and tax burdens are too high. Further, the business community accepted other taxes in 2002 in return for the repeal of the inventory tax, which now comprises only four percent of the statewide property tax levy.

While assessment problems are a major contributor, local government budgets must also be scrutinized. They are currently growing bigger and bigger every year, by about six percent on average. Certainly, most personal and business budgets aren’t increasing by that amount.

There also needs to be more emphasis on efforts to realize possible efficiencies – most notably with centralizing the assessing duties at the county level. This would be a significant step toward the fairness and uniformity of assessments, and avoiding a repeat of this year’s tax debacle.

Sincerely,

Kevin M. Brinegar

President, Indiana Chamber of Commerce

and Patrick J. Kiely

President, Indiana Manufacturers Association

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