Property Taxes

I live in Indiana where we supposedly just had the legislature do a tax revision. What ended up was actually a major property tax increase--of upwards of 100% for some people. I suppose our elected politicians have yet to learn the lessons of the Boston Tea Party when people got fed up with too much taxation without representation.

The problem with property taxes is that what you are taxed on has no bearing on what it is used for. I propose that we take a step back and revise the entire system so there is a direct connection between what you are taxed upon and what it is being used for (similar to using gasoline taxes for road construction and maintenance). I believe that if the public knows their taxes are being used for a related purpose, it will be accommodating to the taxation. Currently, the majority of property tax income is being used for education, hardly a related item.

I propose that property taxes be used for only those governmental accounts that are related to property: security (police, and criminal justice system including prisons and jails), fire protection, trash and waste, and local road maintenance. Perhaps a few more might be included but these are the major items. As can be seen, a direct connect can be made to each of these.

Secondly, I propose that ALL property be taxed. This includes non-profits (including churches), all governmental entities, commercial as well as private. In addition, not just real estate but the value of all possessions on the property should be included (after all, a thief is as interested or more in the jewelry and computers that exist under your roof as your property alone). Notice ALL property . . . a church is protected by the police and fire, why should not it pay according to the value of its property. A property with a BMW and a JAG in the garage has more to protect than a similar property with two ten year old compacts in the garage, why should they not pay more?

Since education has been deleted and the taxable items made more encompassing, it is highly probable that the direct property tax rates (typically 1 to 4% of the residential value) will fall drastically. And in addition, the public should be considerably more amiable to paying for services that can directly connect with the taxes.

A major problem that has come up in Indiana deals with property evaluation and reassessment. All property values should be considered at current market value (what an unaffiliated entity would pay for the property). Reassessment should be at the time of the sale (sale amount) or every 5 years. If after 5 years, a revaluation is made, the value upon which the tax should be paid should not increase beyond 10% per year until it reaches the new assessment level. Once again, the public does not argue that its property has gone up in value only that the increase is all at once and offers a dreadful sticker shock.

Allocation of the monies. The state should institute the tax state wide and deliver the monies to the county. Each county and municipality should then have the option of including a local surtax. The county should be the fiscally responsible agent .

With the current uproar about the property tax and the unbelievably high levels of increase, perhaps we should rethink the entire system of taxation.

Comments?