Indiana Farm Bureau Proposes Significantly Reducing Property Taxes

INDIANAPOLIS, IN - Indiana Farm Bureau has released the details of a property tax reduction/replacement plan that would lower Indiana property taxpayers’ burden by more than $2 billion, reducing the total property taxes charged by about one-third.  At a Sept. 24 news conference at the Indiana Statehouse, IFB President Don Villwock presented a plan that fulfills IFB’s core principles for property tax reform: removal of entire tax levies, relying on taxes that are based on taxpayers’ ability to pay, and treating all taxpayers the same.

“Any solution must be permanent, must be substantial, and must be fair,” Villwock said. “Relief that is only targeted to one segment of our society and economy cannot and will not be permanent.

“Farm Bureau and our members are tired of Band-Aid approaches. Farm Bureau is asking the legislature and the governor to work with us to make sure property tax reform is truly permanent, substantial and – most importantly – fair.

Farm Bureau specifically suggests that five categories of expenditures currently funded by local property taxes be funded instead by state sources. The five expenditures are the school general fund, which currently is estimated to be about $800 million; school utilities and insurance expenses from the school capital projects fund, estimated at $205 million; all remaining welfare levies, estimated at $350 million; levies used to support local court systems which may be as much as $350 million; and a set-aside for a new school “rainy day” fund, estimated at $400 million. When the school "rainy day" fund reaches a sufficient level, the plan calls for annual school debt reduction grants of $400 million. 

These five categories of expenditure total an estimated $2.105 billion in property tax liability.            

Farm Bureau proposes funding these expenditures by increasing the state personal income tax from 3.4 percent to 4.4 percent, which would raise about $1.225 billion, and increasing the sales tax from 6 percent to 7 percent, which would raise $880 million. Not coincidentally, these increases total $2.105 billion in state revenue.

IFB’s policy, adopted by the delegate body in August 2007, says IFB supports “permanent and substantial measures to free Hoosiers from the burden of property taxes.” IFB members have been lobbying against property taxes for decades because they are not based on a person’s ability to pay. It doesn’t matter if a homeowner gets laid off from his job or a farmer suffers through a year of low crop prices – the same property taxes will still be due.

The property tax system, Villwock said, is broken. According to estimates by the Legislative Services Agency, net property taxes in Indiana grew between 2006 and 2007 by about $800 million – an increase of more than 14 percent. This is nearly six times the current inflation rate of 2.36 percent. In contrast, the previous two years saw a combined increase of $470 million.

“It is just not an assessing problem, it is a tax burden problem,” Villwock said. “We say enough is enough. We must fix the property tax system.

“We know that we cannot do away with property taxes altogether in the short term,” he added. “That is still a noble, long-term goal that we in Farm Bureau will still strive for. I think we need immediate relief today, we need it now, and we can’t wait…to get property tax relief.”

Source: Indiana Farm Bureau Press Release

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