As you’ve likely noticed, property taxes were back in the news this week as the State and Local Tax Review task force wrapped up their efforts with a set of recommendations to be forwarded to the upcoming 2025 session of the Indiana Legislature. Our local connection, besides our fixation on how our local residential property taxes have been an increasing share of the total pie, is, as reported, our state Sen. Travis Holdman’s involvement in the task force.
There have also been some other new news, which can be summarized by two statements (with some expounding of course):
• Hoosiers are not alone in their frustrations with property taxes.
There were ballot measures in eight states Nov. 5, “a sign of mounting frustration with tax bills that have soared alongside big increases in home values,” the Wall Street Journal reported. Florida and Georgia were among the states that voted for certain limits, but North Dakota rejected a proposal of a complete ban.
Georgia approved a plan that would limit property assessment increases for current homeowners to an annual inflation rate rather than the real market value. Exactly how that would work and what impact it might have is, of course, complicated. New Mexico, Colorado and Virginia each voted to expand property tax exemptions for veterans or their families.
Perhaps the most unusual property tax-related measure to pass came in Arizona and from the conservative Goldwater Institute. The think tank devised the proposal that allows real estate owners to apply for property tax refunds when they spend money to protect their properties from homeless individuals, or to repair damage allegedly caused by them.
• But the experts say we’ve got it pretty good.
Meanwhile, the Tax Foundation, a conservative-leaning but highly respected think tank based, of course, in Washington D.C., has released its most recent study of tax policies across the nation. Indiana has consistently been among the most “tax friendly” states in their analyses — ranking as the 9th best for a number of years before recently slipping back to 10th place in their overall ratings.
They also break down their rankings in the different tax categories, such as income taxes, corporate taxes, sales taxes and of course, property taxes. The irony here is that these independent analysts have determined that we Hoosiers enjoy the fifth-best-rated property tax system in the nation.
The exact criteria on which this is based is not as clear as I’d like, but it is certainly largely based on the property taxes paid as a percentage of property values — both residential and business. Our research has shown that not only are Hoosier averages below the national average, but Wells County’s are below the Hoosier average.
So, what are we complaining about? Well, it depends on whom you ask. Businesses? Farmers? Landlords? Homeowners? There’s been a definite “tax shift” and as you may recall, our research in local residential owner-occupied properties have found increases in annual property tax bills since 2018 all across the board — from single digit increases to more than doubling over those six years. And that inconsistency in assessments has been at the core of many complaints.
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I will add to this entry a few thoughts on two bullet points of the task force’s final report, which said that all “eligible taxpayers older than 65 should receive a credit” to ensure bill reductions, and that Indiana “make progress toward” a transparent and accountable property tax system in which taxpayers see bills drop when rates drop.
“Eligible” is an important word regarding us senior citizens. It at least implies that not all homeowners over 65 should get an automatic reduction just because they’re old, which I totally agree. I do think the existing income threshold for older-homeowner credits needs to be raised. As to where that lands, we will leave that to those who get paid the big bucks to make those decisions.
As for more simplicity, I think we need to wish our legislators good luck. In his closing remarks, co-chair Rep. Jeff Thompson, R-Lizton, urged his fellow legislators to keep that in mind as they craft and vet any legislation regarding property and local income taxes.
When anyone has made any reference that I might know enough about property taxes to be some kind of “expert,” I have replied that “the more I’ve learned about property taxes, the more I don’t know.” But I think I know enough to recognize that crafting a system “in which taxpayers see bills drop when rates drop” may be impossible. It’s just not that simple. Can it be? We will see, I guess.
Meanwhile, I found it interesting why one of the House members on the SALTR task force, Edward DeLaney, D-Indianapolis, was the lone dissenter in approving the formal report, noting he saw “no focused relief” for homeowners. He argued that homeowners have gradually shouldered a higher share of the state’s overall property tax burden.
“We could deal with that,” he addressed Thompson, who chaired Wednesday’s meeting and also heads the House Ways and Means Committee.
“Yes, and I hope to,” Thompson replied.
“We’re not dealing with it in this proposal,” DeLaney said.
“That’s correct,” Thompson replied.
The task force subsequently added more specific language to the first recommendation during the meeting after Sen. Fady Qaddoura, D-Indianapolis, suggested adding “particularly for homesteads” to the end of the first recommendation. It was approved by consent.
That was not enough to appease DeLaney, who also made an observation that I’d neither thought about nor heard anyone else previously share. He noted “the critical distinction” between homeowner property and any other form of property.
“My house is only a source of expense. It does not generate any income for me, it only generates expense” in the form of mortgage payments, insurance, and property taxes, he explained. “All these other forms of property, where we’ve shifted the tax away from them, all have income attached to them. This is where we’ve gotten away from understanding the concerns of citizens.” Particularly senior citizens on fixed incomes, he continued, but he also cited statistics that show younger people are not buying homes, he feels in large part due to higher property taxes.
Interesting. But there are some wrinkles to this. Commercial real estate, particularly industrial properties, provide the jobs that drives the incomes for people to afford those homes. Rental properties provide income for the owners but also are a key part of the economy in — theoretically at least — providing lower-cost housing options. Higher property taxes for rentals are ultimately passed along to the renter.
However, DeLaney’s observation is also consistent with Holdman’s oft-repeated observation that the property tax “is a wealth tax,” as opposed to a tax based on ability to pay. However, DeLaney also made a point that the current Homestead deductions and tax credits disproportionately favor the wealthier, giving some meat to an argument that this wealth tax is harder on the least wealthy homeowners, not to mention renters.
All of which again displays the complexity of property taxes, not only in mechanics but also in theory. Which guarantees that “fixing” all of this, despite Hoosiers having a relatively favorable system, will continue to be in the news.
miller@news-banner.com
