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Association of Indiana Counties Tax Caps

Association of Indiana Counties Tax Caps. Tax caps are a good policy but is 3, 2, 1 a good policy? A good tax policy provide some certainty to taxpayers and acts as a “limiter” on local spending. Other state’s caps policy usually have means testing. Some states subsidize the loss of revenue.

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Association of Indiana Counties Tax Caps

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  1. Association of Indiana CountiesTax Caps • Tax caps are a good policy but is 3, 2, 1 a good policy? • A good tax policy provide some certainty to taxpayers and acts as a “limiter” on local spending. • Other state’s caps policy usually have means testing. • Some states subsidize the loss of revenue.

  2. Association of Indiana CountiesCurrent Constitution Provision Article 10. • Section 1. (a) The General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal. The General Assembly may exempt from property taxation any property in any of the following classes:        (1) Property being used for municipal, educational, literary, scientific, religious, or charitable purposes.        (2) Tangible personal property other than property being held as an investment.        (3) Intangible personal property.        (4) Tangible real property, including curtilage, used as a principal place of residence by an:            (A) owner of the property;            (B) individual who is buying the tangible real property under a contract; or            (C) individual who has a beneficial interest in the owner of the tangible real property.    (b) The General Assembly may exempt any motor vehicles, mobile homes, airplanes, boats, trailers, or similar property, provided that an excise tax in lieu of the property tax is substituted therefor.(History: As Amended November 8, 1966; November 2, 2004).

  3. Joint Resolution • SOURCE: CON 10; (10)HJ9204.2. -->     SECTION 2. ARTICLE 10, SECTION 1 OF THE CONSTITUTION OF THE STATE OF INDIANA IS AMENDED TO READ AS FOLLOWS: Section 1. (a) Subject to this section, the General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal.    (b) A provision of this section permitting the General Assembly to exempt property from taxation also permits the General Assembly to exercise its legislative power to enact property tax deductions and credits for the property. The General Assembly may impose reasonable filing requirements for an exemption, deduction, or credit.     (c) The General Assembly may exempt from property taxation any property in any of the following classes:        (1) Property being used for municipal, educational, literary, scientific, religious, or charitable purposes.        (2) Tangible personal property other than property being held as an investment.        (3) Intangible personal property.

  4. Joint Resolution •  (4) Tangible real property, including curtilage, used as a principal place of residence by an:            (A) owner of the property;            (B) individual who is buying the tangible real property under a contract; or            (C) individual who has a beneficial interest in the owner of the tangible real property. • (b)(d) The General Assembly may exempt any motor vehicles, mobile homes (not otherwise exempt under this section), airplanes, boats, trailers, or similar property, provided that an excise tax in lieu of the property tax is substituted therefor.

  5. Joint Resolution • (e) This subsection applies to property taxes first due and payable in 2012 and thereafter. The following definitions apply to subsection (f):        (1) "Other residential property" means tangible property (other than tangible property described in subsection (c)(4)) that is used for residential purposes.        (2) "Agricultural land" means land devoted to agricultural use.        (3) "Other real property" means real property that is not tangible property described in subsection (c)(4), is not other residential property, and is not agricultural land. (f) This subsection applies to property taxes first due and payable in 2012 and thereafter. The General Assembly shall, by law, limit a taxpayer's property tax liability as follows:        (1) A taxpayer's property tax liability on tangible property described in subsection (c)(4) may not exceed one percent (1%) of the gross assessed value of the property that is the basis for the determination of property taxes.         (2) A taxpayer's property tax liability on other residential property may not exceed two percent (2%) of the gross assessed value of the property that is the basis for the determination of property taxes.

  6. Joint Resolution • (3) A taxpayer's property tax liability on agricultural land may not exceed two percent (2%) of the gross assessed value of the land that is the basis for the determination of property taxes.        (4) A taxpayer's property tax liability on other real property may not exceed three percent (3%) of the gross assessed value of the property that is the basis for the determination of property taxes.

  7. Joint Resolution •  (5) A taxpayer's property tax liability on personal property (other than personal property that is tangible property described in subsection (c)(4) or personal property that is other residential property) within a particular taxing district may not exceed three percent (3%) of the gross assessed value of the taxpayer's personal property that is the basis for the determination of property taxes within the taxing district. •     (g) This subsection applies to property taxes first due and payable in 2012 and thereafter. Property taxes imposed after being approved by the voters in a referendum shall not be considered for purposes of calculating the limits to property tax liability under subsection (f). • (h) As used in this subsection, "eligible county" means only a county for which the General Assembly determines in 2008 that limits to property tax liability as described in subsection (f) are expected to reduce in 2010 the aggregate property tax revenue that would otherwise be collected by all units of local government and school corporations in the county by at least twenty percent (20%). The General Assembly may, by law, provide that property taxes imposed in an eligible county to pay debt service or make lease payments for bonds or leases issued or entered into before July 1, 2008, shall not be considered for purposes of calculating the limits to property tax liability under subsection (f). Such a law may not apply after December 31, 2019.

  8. Association of Indiana CountiesWhat’s Behind the tax cap question "PUBLIC QUESTION #1 SHALL PROPERTY TAXES BE LIMITED FOR ALL CLASSES OF PROPERTY by amending the Constitution of the State of Indiana to do the following:        (1) Limit a taxpayer's annual property tax bill to the following percentages of gross assessed value:            (A) 1% for an owner-occupied primary residence (homestead);            (B) 2% for residential property, other than an owner-occupied primary residence, including apartments;            (C) 2% for agricultural land;             (D) 3% for other real property; and            (E) 3% for personal property.            The above percentages exclude any property taxes imposed after being approved by the voters in a referendum.        (2) Specify that the General Assembly may grant a property tax exemption in the form of a deduction or credit and exempt a mobile home used as a primary residence to the same extent as real property?".

  9. Lake and St. Joe special treatment • The Lake and St. Joseph “special treatment” on exempting some debt from the cap calculation is not part of the question. How are voters in those counties to know they are treated different? • Does the exemption violate another part of the Constitution, Article 1 Section 23 Section 23. The General Assembly shall not grant to any citizen, or class of citizens, privileges or immunities, which, upon the same terms, shall not equally belong to all citizens.

  10. Association of Indiana CountiesTaxpayer: Of course I am voting Yes • Taxpayer: Why I am voting YES • My property taxes are capped, my property taxes can never increase. • Once my property hits the cap, my property taxes can never increase. • Once my property hits the cap and my assessed value is stagnant, my property taxes can never increase.

  11. Association of Indiana Counties Taxpayer: Of course I am voting Yes • Once my property taxes hit the cap and my assessed value is stagnant, and my community never approves a referendum, my property taxes are capped. • Once my property taxes hit the cap and my assessed value is stagnant, and my community never approves a referendum and the General Assembly never meets again and the DLGF never writes or changes a rule then my property taxes are capped.

  12. Association of Indiana Counties Taxpayer: Of course I am voting Yes • OK – A Constitutional Amendment may not cap my property taxes but I still want to vote yes because local governments will have to cut their spending. • LOITS. • Fee increases.

  13. Association of Indiana Counties Taxpayer: Of course I am voting Yes • OK – A Constitutional Amendment may not cap my property taxes and may not cut local government spending but forcing local units of government to use income taxes rather than property taxes is better for me. • A valid tax policy. • Income taxes follow levies, not income tax contributors. • Not everyone who owns a property that hits the cap pays LOIT – shifting the burden.

  14. Association of Indiana CountiesWhat’s Behind the tax cap question • Constitutional Amendment is needed to validate an Unconstitutional Property tax system. • Constitutional Amendment “clarifies” the General Assembly’s power over property tax policy.

  15. Circuit Breaker Effect on TaxpayersPrepared by Crowe Horvath

  16. Association of Indiana CountiesWhat’s Behind the tax cap question • What can you do as elected officials to educate the public. • Release the top ten properties that benefit from the caps. • Provide a GIS map of properties that hit the caps. • Provide the average assessed value of homesteads that hit the caps. • Provide the percentage of homesteads/properties that hit the caps.

  17. Association of Indiana CountiesWhat can you do to educate the public? • Invite your local media to attend an informational meeting and provide the local information. • Educate service clubs (Rotary, VFW’s, American Legion) and animal clubs (Eagles, Moose). • Opportunity to get into high school government classes next August and September. • Do not urge people to vote yes or no in the Courthouse. Educate do not advocate.

  18. Association of Indiana CountiesWhat’s Behind the tax cap question • Show how some people pay more for the same services than others. • Example 2 $200,000 NAV homes. Taxpayer A is in a tax district that hits the caps and Taxpayer B is a tax district that does not hit the caps. • Taxpayer A pays less than Taxpayer B for county services even though NAV is equal.

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