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Watchdog Indiana provides information about the revenues, spending, and long-term debt assumption of Indiana local and state governments. An online community is established where Hoosiers come together voluntarily to help encourage our state and local governments better respond to the needs of working families.
Watchdog Indiana is a
non-profit, non-connected, and non-party advocate for good government that focuses on the
state and local tax burden of Hoosier working families.
Watchdog Indiana was founded by Aaron Smith on November 14, 2001.
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Immediate action needed!
11/01/2014: State Senator Phil Boots (Crawfordsville) has promised to author municipal annexation reform legislation for the 2015 session of the General Assembly. Please contact Senator Boots (765-362-1504, S23@in.gov) and ask him to use the proposed municipal annexation reform legislation at http://www.finplaneducation.net/municipal_annexation_reform.htm as the foundation for his municipal annexation reform bill.
Did You Know?
02/17/2014: Two business personal property tax bills that would significantly impact Hoosier working families are wending their way through our Indiana General Assembly . Listed next are summaries of the key provisions of both bills and an analysis of these key provisions from a Taxpayer Friendly standpoint.
SENATE BILL 1
Full SB 1 information can be found at http://iga.in.gov/legislative/2014/bills/senate/1/#. Key SB 1 provisions are summarized next.
(1) If the value of a taxpayer's business personal property in a county that would otherwise be subject to taxation is less than $25,000 for an assessment date beginning with the Pay 2016 property tax year, (a) the taxpayer would not be required to file a business personal property return in the county for that assessment date and (2) the taxpayer's business personal property in the county would be exempt from taxation for that assessment date. The taxpayer would be required to file an annual certification with the county assessor. For property taxes payable in 2013, there were about 200,700 out of 292,000 personal property tax returns (69%) that had an estimated book value less than $25,000. To keep tax increment financing (TIF) revenues mostly unchanged, the allocation of TIF revenues would be based on a calculated tax rate that includes the personal property assessed value that would otherwise be exempted. The statewide impact on Pay 2016 property taxes would be as follows: (a) businesses would pay $54.4 million less personal property tax, (b) homesteads would pay $8.8 million more, (c) other residential would pay $2.1 million more, (d) apartments would pay $0.4 million more, (e) agricultural real property taxes would increase $3.6 million, (f) other real property taxes would increase $7.9 million. The net property tax loss of $31.5 million to local county, township, city, town, school, library, and special government units would vary from county to county – from $6,471,850 in Marion County to $8,340 in Ohio County.
(2) The following business income tax changes would be made: (a) the corporate income tax rate would be phased down from 6.5% through 2015, to 6.0% in 2016, to 5.5% in 2017, to 5.0% in 2018, and to 4.9% in 2019 and thereafter; (b) the financial institutions tax (FIT) rate would be phased down from 6.5% in 2018, to 6.0% in 2019, to 5.5% in 2020, to 5.0% in 2021, and to 4.9% in 2022 and thereafter; (c) the research and development tax credit percentage would be reduced by half for qualified research expense incurred after 2014; (d) the college contribution, riverboat building, biodiesel production, ethanol production, and new employer tax credits would not be awarded after 2014; (e) the voluntary remediation and energy savings tax credits would be repealed. The cumulative state revenue declines from these business income tax changes would be $13.1 million in fiscal year 2017, $53.6 million in fiscal year 2018, $99.3 million in fiscal year 2019, and $113.3 million in fiscal year 2020. Because current law requires that the total amount of FIT distributions to local entities in a fiscal year be equal to 40% of the total FIT revenue collected during the preceding fiscal year, phasing down the FIT rate would result in statewide local FIT distribution declines of $1.0 million in fiscal year 2020, $2.8 million in fiscal year 2021, $4.7 million in fiscal year 2022, and $5.8 million in fiscal year 2023.
(3) The Commission on Business Personal Property and Business Taxation would be established to study the following during the 2014 legislative interim: (a) issues concerning the taxation of business personal property and business taxation in general, (b) issues related to the share of the overall tax burden borne by businesses in Indiana, (c) the competitive advantages and disadvantages for businesses in Indiana that result from the structure of state and local taxation, (d) any special elements of the taxation of business personal property, (e) issues related to the share of property tax burden borne by nonbusiness taxpayers, (f) the impact on local government of reducing business personal property taxes, (g) other topics as assigned. The eleven-member Commission would consist of six legislators, four lay members, and the governor or his designee, and would submit its final report to the Legislative Council before November 1, 2014.
HOUSE BILL 1001
Full HB 1001 information can be found at http://iga.in.gov/legislative/2014/bills/house/1001/. Key HB 1001 provisions are summarized next.
A county income tax council would be empowered to adopt an ordinance to exempt from property taxation any new business personal property (other than utility personal property) that is located in the county. Taxpayers would not be required to file an application, and the exemption could be effective as early as taxes payable in 2015. Property tax rates would increase as new personal property is exempted from property taxation . As a result, property taxes would begin to shift from owners of the exempt property to all other taxpayers. If the minimum estimated amount of gross assessed value is lost, then the overall tax shifts and rate-controlled levy losses could be minimal. However, if all of the non-utility personal property gross assessed value is eventually lost, then personal property taxpayers would save $802 million over a ten-year period and tax shifts to real property could be as much as $276 million. The net 10-year property tax loss of $525.3 million to local county, township, city, town, school, library, and special government units from exempting all new non-utility business personal property tax would vary from county to county – from $114,267,240 in Marion County to $52,700 in Ohio County. Increased tax rates would also result in increased tax increment financing (TIF) revenue for real property TIFs. Revenue may rise or fall in personal property TIFs depending on the reduction in assessed value in the TIF allocation area versus the tax rate increase.
TAXPAYER FRIENDLY ANALYSIS
HB 1001 is Taxpayer UNfriendly for the reasons listed next.
A. County income tax councils threaten the American concept of majority rule because it is possible for elected officials representing a minority of a county’s population to adopt an ordinance exempting from property taxation any new non-utility business personal property: see http://www.finplaneducation.net/income_tax_councils.htm.
B. Homeowners below the property tax cap could suffer a significant property tax increase.
C. Local county, township, city, town, school, library, and special government units could experience a significant decline in property tax revenue.
D. A February 2014 Information Brief from the Indiana Fiscal Policy Institute (http://www.indianafiscal.org/) concludes, “Studies have shown taxes on business personal property have a small effect on business relocation from outside a state, but depending on the structure if enacted could have a larger effect on relocation decisions from county to county within the state.”
E. A December 2013 study titled ‘'Local Tax Abatement” (http://projects.cberdata.org/75/local-tax-abatement) from the Ball State University Center for Business and Economic Research includes the following results: “We report findings that suggest that, as a job creation tool, local tax incentives in Indiana appear to be minimally effective. We also report that there is not a strong relationship between abatements and the growth of assessed value over time. The implication is that, on average, the use of abatements as a tool for growing a property tax base is not particularly effective in the short to intermediate term."
F. Indiana Code 6-1.1-12.1-17 already allows local jurisdictions to grant up to 100 percent abatement of real and personal property for up to 10 years.
G. Elimination of the business personal property tax is primarily a business tax shift proposal instead of an economic development proposal.
The current version of SB 1 is taxpayer neutral.The relatively small increase in homestead property taxes from exempting business personal property taxes below $25,000 is offset by the business-friendly savings derived from no longer having small businesses complete and local assessors process tens of thousands of personal property tax forms that yield a tiny fraction of total property tax payments. State revenue losses from the proposed business income tax changes could be easily offset by the state’s ample reserves. The summer study commission report on business taxation will have to be carefully reviewed to make certain homeowners are not adversely impacted by recommended business tax shifts.
SB 1 would be Taxpayer Friendly if the state provides a personal property tax replacement credit that replaces lost local revenue without local tax increases.
NEW! Homestead Deductions Threat: Indiana General Assembly legislation has been authored that would increase the property tax burden of Residential and Agricultural Homesteads by 12.18%. The following property classes would pay 13.67% less in property taxes: Agricultural Business, Commercial, Commercial Apartments, Exempt Organizations, Industrial, Nonhomestead Residential, Utilities. This legislation would disproportionally and dramatically increase the property taxes on the owners of lower value homes while the owners of higher value homes would have a lesser or no property tax increase.
Indiana General Assembly & Governor Ratings: Watchdog Indiana provides the only ratings of state legislators and the governor based on how their votes on key legislative proposals from 2002 to the present affect the state and local tax burden of Hoosier working families.
Who Are Your Elected Officials: You can enter your address or click on a map to see a list of all your elected official - local, state, federal - in one place. All information on this site is maintained by your local county circuit court clerk's office in conjunction with the Indiana Secretary of State's office.
Indiana Transparency Portal: This one-stop online portal for state government information provides easy access to all state contracts, employee salaries, an interactive budget section, revenue data, state debt authority overview, financial statements for both local governments and state government, performance information, and recovery and reinvestment act information.
Stop Local Option Waste (SLOW): The SLOW webpage summarizes by county the actions that Hoosier fiscal patriots have taken to stop the wasteful spending of our hard-earned federal tax dollars on unnecessary nice-to-have local projects that do not address high-priority needs. Everyday citizens must provide the leadership needed to overpower the single-interest advocates whose cumulative efforts enable the Congressional gridlock that fosters ruinous federal deficit spending.
Third Grade Best Practices Practices Inventory Report: Nine "Best Practices" have been identified from the Best Practices data provided by some Principals of the Indiana elementary schools that were among the Third Grade Spring 2010 ISTEP+ Results Leaders. These improvement ideas will be helpful to those Hoosiers concerned about K-12 public education.
Indiana's Cash For College: Updated annually in the lead-up to Indiana's March 10 financial aid deadline, Cash for College works to equip students and families with the practical steps needed to plan and pay for college. Indiana's Cash for College Campaign is made possible by Learn More Indiana, a partnership of the Indiana Commission for Higher Education, the Indiana Department of Education, the Indiana Department of Workforce Development and the State Student Assistance Commission of Indiana.
2008 House Bill 1001: Thanks to the November 2, 2010 passage of the Constitutional Amendment, this comprehensive property tax relief bill makes the state and local tax burden of Hoosier working families more fair and affordable by moving away from property taxes to sales and income taxes.
Redevelopment Commissions Oversight: Watchdog Indiana supports much improved oversight over redevelopment commissions and departments by (a) the legislative or fiscal body of the taxing unit that created a redevelopment commission or department, (b) the State Board of Accounts, and (c) everyday Hoosiers through the public meeting and public records laws.
UPDATED! Rational Municipal Annexations and Reorganizations: Many concerned Hoosiers realize that Indiana Code changes are needed to protect against illogical and predatory municipal annexations and reorganizations. Proposed legislation for municipal annexation reform can be found on the Watchdog Indiana web page at http://www.finplaneducation.net/municipal_annexation_reform.htm.
Township Government Reform: Watchdog Indiana has developed a position on township government reform that includes placing the public question "Shall the township government be retained?" on the ballot in every county.
Indiana Foreclosure Prevention Network: If you or someone you know is behind on the mortgage, or even in danger of falling behind, please contact the IFPN, a statewide program to provide free mortgage foreclosure counseling and education to at-risk homeowners. All Network services are free, and all Network counselors are certified by the U.S. Department of Housing and Urban Development, or HUD.
IHCDA University: The Indiana Housing and Community Development Authority has a free online course to educate prospective homebuyers on the home purchasing process.
Lobbyists and the Legislature: How much do lobbyists spend? Which lawmakers accept gifts from lobbyists? The Indianapolis Star has established a searchable database of Indiana General Assembly lobbyist spending for the reporting periods from May 2009 through April 2010.
Watchdog Indiana Topics Index
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This page was last updated on 11/01/14.