Woody Burton: The History of Property Taxes and Why They Should be Eliminated

The History of Property Taxes and Why They Should be Eliminated
Guest Column IN.gov News Room

It is no secret that property taxes have become a major issue in Indiana. Property taxes continue to drastically increase, and Hoosiers are demanding action. The only way to completely reform Indiana's broken tax system is to permanently repeal property taxes through a constitutional amendment and voter referendum.

To understand why property taxes must be eliminated, we need to look at the history of property taxes in Indiana.

1933
First Corporate Gross Income Tax was created (eliminated in 2002)
First Individual Gross Income Tax was created (replaced with Individual Adjusted Gross Income Tax in 1963)
Two new "temporary" taxes were created in order to provide property tax relief, but the taxes remained in place for years to come and the relief was short lived.

1963
First sales tax was created at 2%
Individual Gross Income Tax repealed and replaced with Individual Adjusted Gross Income Tax of 2%
The purpose of this was to provide property tax relief, but the relief was temporary.
1967 (The sales and income taxes were bringing in more money than initially anticipated.)
8% of the sales tax went to local governments
8% of the income tax went to local governments
The purpose of this was to provide property tax relief, but the relief was temporary.

1973
Governor Otis R. Bowen implemented a property tax plan that was "substantial and visible"
Again, the relief was temporary.

1986
Due to inflation, 1986 property taxes were at the same level as they were in 1973
All of Governor Bowen's property tax reductions were erased within 5 years
We cannot let this chain of property tax shifting continue. Now is the time to fully and permanently eliminate property taxes. The history of property taxes shows us that Band-Aid approaches will not work. Hoosiers will continue to be burdened with property taxes unless they are completely eliminated.

From special interest groups to various levels of government, people are saying that it cannot be done. If everyone says it can't be done, it will not happen. These groups have voiced numerous concerns about repealing property taxes.

Businesses are concerned about increases in business taxes. Realtors are concerned about increases in transaction taxes. Farmers are concerned about increases in equipment taxes. This is only the beginning of the long process to fully eliminate property taxes in Indiana. As the long process to eliminate property taxes takes its course, more and more people are going to come forward with concerns about eliminating property taxes. They may all be justifiable concerns, but I encourage Hoosiers to stay focused on the goal of ridding Indiana of this unfair and burdensome tax. The only way we will be able to achieve this goal is for the public to stay engaged.

It is obvious that by eliminating property taxes, we will have to replace the lost revenue with another form of taxation. For example, increasing the sales tax is one way to reduce Indiana's reliance on property taxes, but this can only happen when property taxes are constitutionally repealed. In the current system, only those who own property pay for local government services, such as fire departments, libraries, and schools. If these services were paid for by an increase in sales tax, everyone-even illegal aliens and drug dealers-would contribute. Although I do not support these activities, if someone uses the services paid for by property taxes, he or she should be required to contribute to the funding.

The Indiana Chamber of Commerce recently reported that Hoosiers want the government to find ways to cut spending. A big step in the repeal process involves holding elected officials accountable for spending. I have suggested creating a local government budget board for each county, similar to the State Budget Agency that makes budget recommendations for the state. The members of the budget board would consist of local elected officials who would have the authority to set a budget for everything that is currently funded by property taxes. This would allow the public to know who is directly responsible for spending in their community. In politics, the closer an elected official is to home, the easier it is to vote them out of office if they are not holding up their end of the bargain.

I have merely mentioned a few of the issues involved in the process of permanently repealing property taxes. It is important for the public to stay involved, and it is equally important for state leaders to continue to develop a plan that will result in permanent and long lasting reform. It is also important that you contact your state senators and representatives and let them know how you feel about permanently eliminating property taxes in Indiana.

Look again at the history of property taxes. Not once in the past 74 years have we truly reformed Indiana's property tax system. It is time to quit shifting the weight of property taxes from one tax to another. We need to completely and permanently eliminate property taxes once and for all.

For more information on repealing property taxes in Indiana, contact me by email at H58@iga.in.gov, telephone at (317) 232-9747, or by mail at State Rep. Woody Burton, 200 W. Washington St., Room 401-6, Indianapolis, IN 46204.

For immediate release:
Oct 05, 2007
Posted by: [r58]
Contact: Corrie Bennett
Phone: (317) 232-9661
Email: cbennett@iga.in.gov