Property taxes are getting much attention in the media and at the Statehouse. That said, there’s really no justification for local government budgets or at least the property tax component of those budgets to go up by 15%. We do not believe actual property tax bills will increase by such an amount for the vast majority of homeowners because assessed values don’t necessarily translate into increases in bills or increases in levies. We also don’t believe the General Assembly will allow that to happen.
If you boil down the legislative measures that have been filed in this area, they fall into two categories. One would reduce the tax bills and thus the revenue to local government. Then the other would cap growth for residential property but would shift the burden to other taxpayers.
We are very much opposed to any and all of those bills because the business community already pays a disproportionate share of the property taxes, meaning that the business community’s share of assessed valuation is less than its share of taxes actually paid. We are heavily engaged on this matter and following proceedings very closely.
Governor Holcomb visited with our executive committee on Thursday and said that he and the legislative leaders that get together every Wednesday morning are watching this very carefully and discussing it, and they expect to have some near final numbers with which to make some policy decisions within the next week or two.
One tax bill we are championing is Senate Bill 2, which has the potential to save small businesses in Indiana well over $100 million in federal tax liability without reducing any revenue to the state of Indiana. Authored by Sen. Scott Baldwin (R-Noblesville), it would allow those small businesses with pass-through entities to take full deductibility for the state and local income taxes that they have paid.
The Tax Relief Act at the federal level in 2017 reduced federal tax rates, corporate tax rates and other things, but it also had some pay-fors (revenue measures to pay for new spending); one of them was to put a $10,000 cap on the amount of state and local taxes that individuals and small businesses where the tax is paid on the individual income tax of their owners. Essentially, this bill creates a workaround that has been adopted by many other states and approved by the IRS. It will let those small business owners take the full deductibility and save considerable money on their federal taxes, but still pay the same amount of state taxes. Senate Bill 2, which is retroactive to the current tax year, is being fast-tracked and may even be on the Governor’s desk in mid-February.
