Designing a Property Tax: Coupling local expenditure to a property tax
Elimination of Personal Property Tax January,2014
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Transcript of Elimination of Personal Property Tax January,2014
Elimination of Personal Property Tax
January,2014
Elimination of Personal Property Tax
Recent LSA memo estimates $1.063 billion of tax revenue would be eliminated…
Legislative Services Agency Memorandum, 12/23/2013
Elimination of Personal Property Tax-Effect
• Circuit breakers to local units (cities, towns, counties,school corporations, libraries etc.) would account for $554
million lost revenue
Legislative Services Agency Memorandum, 12/23/2013
Elimination of Personal Property Tax-Effect
• Tax shift to real property owners would account for $350 million
Legislative Services Agency Memorandum, 12/23/2013
Eliminaton of Personal Property Tax
1. LOST REVENUE
LOCAL LOSS OF REVENUE
LOSS OF REVENUE ESTIMATED BY KOSCIUSKO COUNTY ASSESSOR AND AUDITOR FOR WARSAW CIVIL CITY IS:
$2,214279.28 (11% of General Fund)
REPLACEMENT?•No current replacement
revenue proposed by governor
REPLACEMENT?
•No current replacement revenue proposed by state
Elimination of Personal Property Tax
SHIFT BURDEN to:LOCAL WAGE EARNERS
REPLACEMENT?• State Legislators considering shifting
replacement to Local Option Income Tax- .77% increase in payroll tax for Kosciusko County (-LSA Memorandum 12/23/2013)
Elimination of Personal Property Tax
2. SHIFT TAX BURDEN
Eliminaton of Personal Property Tax
23% of Current Assessed Value attributable to personal property tax
Eliminaton of Personal Property Tax
Assessed Value will go down and tax rates will go up
“
Elimination of Personal Property Tax
“With the levy limited and assessed value smaller, most tax rates would go up. Personal property owners would pay less, but higher tax rates would shift this tax burden to everyone else “
Larry DeBoer, “What Happens if We Eliminate Property Tax on Business
Equipment” 11/27/2013
Eliminaton of Personal Property Tax
SHIFT BURDEN to:LOCAL HOMEOWNERS
Eliminaton of Personal Property Tax
SHIFT BURDEN to: LOCAL BUSINESS OWNERS
LOCAL SHIFT
Approximately $775,000 will be shifted directly to real estate property taxpayers, both residential and commercial
Eliminaton of Personal Property Tax
3. LOSS OF LOCAL ECONOMIC DEVELOPMENT TOOLS
Loss of E.D tools
Currently, ABATEMENT give local Redevelopment Commission the flexibility to phase in or eliminate personal property tax on a case by case basis.
Loss of E.D tools
Currently, local Redevelopment Commissions have the flexibility to directly invest personal property tax increment into favorable investment for the developer (ie Winona PVD, Medtronic)
Loss of E.D tools
Elimination of Personal Property Tax eliminates an already limited Local Economic Development Tool Box of yet another incentive.
Does this help meet the original goal of improving Indiana business climate by eliminating PPT?
Loss of E.D tools
One proposal gives counties the ability to opt out of PPT individually… pitting counties against each other, destroying the synergy of regionalism
Does this help meet the original goal of improving Indiana business climate by eliminating PPT?
Position
• We are opposed to the elimination of personal property tax, in part or in its entirety, over time or immediately, without guaranteed, complete income replacement.
“REPLACE NOT ERASE”