April 23, 2014

KITCHELL: Tax bills show what smoke & mirrors don't


---- — There’s a price to be paid for the decline in what we call civic engagement — and local property taxpayers are paying that price.

In case you haven’t received your 2014 Cass County property tax statement yet, be prepared for a bit of sticker shock when it comes to the city of Logansport tax rate. One friend emailed me about a 73 percent increase.

Wait a minute, isn’t this what the much reported “property tax caps” were intended to protect us from having? Anyone care to think what the increase would be without those “protections” in place?

The fact of the matter is that tinkering with tax rates is far from an exact science. There probably isn’t anyone among us who wouldn’t stand up and cheer for a tax cut, or even the elimination of a tax. It’s also not something that’s easy to oppose, especially when tax cuts lead to the prospect that more econonmic development will follow, bringing a rising tide of economic prosperity with it that will broaden our tax base.

Where this situation went drastically haywire is when Indiana legislators restructured the tax code. On the surface, what grabs the headlines are the cuts, but what sticks around after the vote, the handshakes and the bragging is the bill. Without aligning tax cuts with spending cuts, the bill for taxes shifts to the people still paying taxes. In this case, it’s us. Tax caps gave us a false sense of security that somehow government wouldn’t hike up what it wants from us more than the rate of inlation, or more than the arket value of our properties. But that’s exactly what’s happened, and now yet another “blue ribbon commission” has been appointed to review what happened because whatever projections originally made for legislators weren’t accurate or complete.

The flawed part of this entire picture is the argument that Indiana’s tax encironment for business is somehow burdensome compared to other states. Yet has anyone made this argument in high-tax metropolitan areas such as Chicago, New York, the Silicon Valley or Washington? Nope, and look at the growth in those areas. Indiana’s economic growth doesn’t come close, and in fact if a blue ribbon commission really wanted to study an intriguing issue, studying the number of Indiana college graduates who accept jobs in states with higher taxes compared to those who take jobs in Indiana and other states with the lowest taxes would be an interesting one.

A case also can be made for saying that the recent business inventory tax cut in Indiana has a greater impact on smaller communities than larger cities where there are more economic incentives, more private capital and greater access to public funding from various resources including federal funding for metropolitan areas.

Unfortunately, there is an element within Indiana that will never be satisfied until the state does away with all its taxes except income and sales taxes and possibly license plate fees. This element abhors property and inventory taxes and wants to give business and industry a free pass on those taxes, even though many new and existing industries already receive tax abatement and other incentives such as county economic development income tax and Tax Increment Financing district taxes.

Yet there are no real tax incentives from Indiana for new home construction that broadens our tax base, an incentive that would put more Hoosiers to work and upgrade housing stock in urban and rural areas.

For now, legislators have succeeded in doing what highly-paid Las Vegas magicians do every night on a stage — use smoke and mirrors to give the allusion that something, somehow, magically disappeared.

It’s time for the smoke from smoke-filled rooms to be cleared from the Indiana General Assembly and for legislators to look themselves in the mirror and ask themselves if this is what most Hoosiers really had in mind when they’re asked about “tax reform.” If they ask people in Logansport, can’t be yes.

Dave Kitchell is a columnist for the Pharos-Tribune. He can be reached at