The Indiana Association for Community Economic Development (IACED), a NLIHC partner, has released Indiana Property Taxes: Is Property Tax Relief or Tax Restructuring the Solution? In the face of average property tax increases of 24% during 2007, Indiana Governor Mitch Daniels stated that property tax overhaul is a 2008 legislative priority, and he appointed a commission to study possible solutions. The Governor has hinted that he favors eliminating the property tax, making up for lost revenues through regressive sales and/or income tax changes.
IACED’s paper concludes that Indiana’s system of property tax assessments is inequitable, and that if property tax relief and restructuring is not made permanent and targeted, increased mortgage foreclosure and abandonment could result. IACED recommends keeping the property tax, but creating a true “circuit breaker” program based on household income that would result in lower property taxes for lower income people.
IACED looked at other states’ practices of targeting property tax relief for low income households. The paper highlights the need to provide breaks for renters whose landlords raise rents to compensate for increased property taxes. IACED learned that, nationwide, 25% of rent goes to property taxes, and that multifamily rental housing tax rates are 18% higher than those for single-family homes. In order to keep rental housing affordable, IACED also recommends that Indiana preserve the current renter’s deduction and consider increasing it.
Indiana Property Taxes: Is Property Tax Relief or Tax Restructuring the Solution? is at www.iaced.org/subpage.asp?p=2.
Contact: Lisa Travis, IACED Program Manager, firstname.lastname@example.org.