Rep. Jeff Thompson (R-Lizton) is the chair of the House Ways and Means Committee, which oversees legislation that affect the state's finances.
(Alan Mbathi / IPB News)
House Ways and Means Chair Rep. Jeff Thompson (R-Lizton) proposed his version of property tax reform Wednesday.
It’s a dramatic overhaul of the property tax and local income tax system. And it’s left many — including some of his fellow Republican lawmakers — unclear about its full impact.
“We need to be able to follow through exactly what these impacts are going to be,” Rep. Hal Slager (R-Schererville) said. “I’m not quite sure how we’re going to do that, but right now, I don’t know anybody that fully understands that.”
The changes Thompson has proposed come from his HB 1402, which he authored this session but didn’t try to advance in the session’s first half. They include completely altering how homeowners’ property taxes are calculated and would be phased in over several years. Ultimately, it could reduce the property taxes homeowners pay by more than $200 million a year statewide.
But Thompson said people’s property taxes would still go up.
“This is going to be a decrease in that increase,” Thompson said. “Still gonna pay more.”
That doesn’t satisfy some legislators, like Rep. Ed DeLaney (D-Indianapolis).
“I’ll be asking you to come to my district and tell my people to be happy, because I’m not sure this is going to be easily understood,” DeLaney said.
Thompson acknowledged that his proposal isn’t a final product.
The savings homeowners would receive under Thompson’s plan would result in a significant shift of property tax burden onto businesses. But his proposal would also eventually eliminate Indiana's business personal property tax, which businesses pay on the equipment they use.
“There’s a lot in here,” said Indiana Chamber of Commerce Vice President David Ober. “Some that is beneficial to some of my members and some that’s detrimental. But understand the vision and we certainly don’t like the system as it is currently working.”
All of the changes in Thompson’s proposal would gradually reduce the revenue local governments and schools would receive by up to $736 million per year within the next six years.
To help balance that loss, Thompson’s overhaul of the local income tax system would allow counties, cities and towns to separately create and increase local income taxes — something that counties and local income tax councils currently have sole control over.
But Ferdinand Town Council President Ken Sicard said that wouldn’t cover the loss his small community would receive. And he pointed out that Indiana’s total property tax burden, even with the spikes of the last few years, is still considered one of the lowest in the country.
“So I’m kinda asking, why is it necessary that we want to change what is good compared to the rest of the nation?” Sicard said.
Work on the major property tax reform bill, SB 1, will continue in the coming weeks.
