Wednesday, July 18, 2007

A Quick Thought on Property Tax Reform

Much of this recent debate has ignored the fundamental problem of rising property taxes and that's an increase in local spending. Shifting part of the burden from property owners to income earners will not solve the problem. Inevitably, we will be back in the same position except we will have even higher taxes. Any solution must deal with the underlying spending issue.

Matt Kelty has his plan for property tax reform on his website - Cut it, Cap it, Make it Permanent. There are parts of this plan I agree with and I'm happy that Kelty at least acknowledges what the problem is:
While I am critical of the property tax system in theory and in practice I recognize and fully agree with Gov. Daniels that ultimately this crisis has its roots in out-of-control local government spending and borrowing. As Mayor I pledge to bring that spending under control. While I intend to speak more fully on this subject at a later date, when I am elected mayor my first annual budget will reflect zero growth in City spending.

I certainly look forward to hearing Kelty's plans to control spending, but I do not believe a zero growth budget is the answer as I think we need a permanent legislative solution. To be fair, I think Kelty is on the right track and I strongly agree with the following statement:
we are placing the tax burden disproportionately upon one group, without regard to their actual ability to bear this burden. Our property tax system has become indefensible and it must be changed.

I actually like the rhetoric here but I'm concerned he's not quite on the right track. And since Tom Henry hasn't released anything about property taxes I'm not sure where he's at either. I'm not going to make this a partisan issue because I believe we really need to work together to solve this problem. I've been modeling various solutions and I'm close to releasing my own plan - A Populist Approach to Property Tax Reform. This plan will address the major issues facing our current property tax crises.

I look forward to working with both candidates to get out of this property tax quagmire...


LP Mike Sylvester said...

I have worked up a couple of property tax solutions as well.

The best solution I can find is:

1. Make the State pay for the programs it mandates. This would ensure these taxes are not paid for with local property taxes.

2. Remove the entire State subsidy on property taxes. The State should have NOTHING to do with local property taxes. The entire idea of a State subsidy on property taxes was ill advised.

3. Lower the State sales tax 1%. Please remember that the Sales tax was increased from 5% to 6% to rein in proerpty taxes. We can all see how that worked.

4. Lower the State income tax from 3.4% on individuals to 3% on Individuals.

5. The state should then pass a law limiting property taxes to no greater then 1% of the assessed value (County determined, not Township determined) of all real property.

6. All Homestead credits and all exemptions currently allowed should then be removed.

7. The state should then pass a law that would allow localities to raise local income taxes and local sales taxes as they see fit.

Done. Problem solved.

Mike Sylvester

Parson said...

Do you think "zero growth in City spending" will mean zero growth in the city?

LP Mike Sylvester said...


No I do not...

I think that we could easily cut government spending.

I can promise you that if I spent a month going through the City's finances I could find numerous places to cut needless government spending...

Mike Sylvester

Charlotte A. Weybright said...

Anyone want to name some places to cut?

Just curious.

Dave MacDonald said...

Matt Kelty's holding a Property Tax Protest Rally tomorrow:

Courthouse Green
(across from Lincoln Tower)
Friday, July 20th
1:45 p.m.

LP Mike Sylvester said...


If I were to take the time to research the budget I am sure I could come up with a long, long list.

Mike Sylvester