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More to Circuit Breaker than meets the eye

Sunday, September 7, 2008

There are times where perception does not depict reality.

The Circuit Breaker in House Bill 1001 appears to present a reduction in the property taxes residents have to pay, but there are hidden stipulations within the more than 800 pages of text.

"Next year, the Property Tax Replacement Credit (PTRC) will be no more," Clay County Auditor Mary Jo Alumbaugh said. "Also, the Homestead Credit will be reduced and chances are the additional Homestead Credit will be gone as well."

The Circuit Breaker states that homeowners will have a 1.5 percent cap on their property taxes in the 2008 pay 09 tax year and a cap of 1 percent in 2009 pay 2010. This sounds good in principal, but does not make a significant impact on the residents of Clay County.

"Currently, about 90 percent of Clay County homeowners would be under the 1 percent cap as it is," Clay County Council President Mike McCullough said. "But with the dissolution of the PTRC and reduction in the Homestead Credit, more residents are going to feel the effect of the Circuit Breaker, but they will be paying more in property taxes in the end."

Residents will not have to pay taxes above the cap, but the county and all entities that use property tax monies will be losing out on revenue necessary to efficiently operate.

"Essentially, local governments are slowly being forced to enact Local Option Income Taxes (LOIT) upon its residents," McCullough said. "The tax would be necessary in order to maintain the services entities provide without having to lose employees."

McCullough added that he and the council are looking into how they could utilize the LOIT with the least impact on taxpayers.

"I am hoping we never have to start a LOIT because it will hurt the working people the most," he said. "If we do have to start one, I'm thinking it would be when we have no other choice in order to keep the county running."

One of the possibilities if a LOIT were enacted is a maximum of 1 percent on workers' gross salaries.

"If a working couple makes $60,000 combined and own a home with an assessed value of $55,000 after the deductions, they would be paying to have lower property taxes," McCullough said. "The maximum they would pay under the 1.5 percent cap would be $825 and $550 the next year, but with a 1 percent LOIT, the couple would pay $600 a year to save $275 on their property tax bill."

However, all of this stems on if no changes are made to House Bill 1001 during the next General Assembly.

"There is a possibility that everything could change during the next session," Alumbaugh said. "They rushed to get the bill signed in the last hours on the last day, so anything could happen."

Whatever may happen, McCullough has noticed a trend of putting out items that appear great on the surface, but are not what they are cracked out to be.

"The Circuit Breaker caps were enacted to solve major property tax problems in five counties," he said. "However, the potential upcoming impact on the rest of the counties in Indiana, including Clay County, is very uncertain at this time.


Comments
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The reality of the situation is that like individuals, the local governments are now having to pay more for fuel and all other things it needs as well and will need more money to provide amenities to keep the community up and running. While I don't really want to pay more taxes, a local income tax "for the working" is a more fair tax than the increase in state sales tax our state legislators put in place as it taxes all who have to buy goods, no matter what their income is, whether they are retired, unemployed, or are employed and make a million dollars a year or more. My concern is that the county and schools here locally are going to be driven to cut corners to the extreme and that will further drive Clay county down in desirability when families and industry make choices to settle here in the future. That in turn will further lower tax base. I liken it to being a homeowner. While it hurts more to paint or put a new roof on my house due to higher costs now involved, I can't afford NOT to do it so my house won't loose value from disrepair. The county can't afford NOT to keep up the county's infrastructure so as to continually try to get others to come and invest in it.

Personally my Clay County property taxes decreased drastically. This makes me think that the circuit breaker was more an election year decision than one to make our state truly more solvent as the individual counties failing add up to the state's failing. Voting some of these state legislators out of office might send the needed message. I hope voters think about this in November instead of thinking it's the local government that is responsible for our financial woes as the state is shifting the responsibility to locals so things will look better at the state level.

-- Posted by Jenny Moore on Mon, Sep 8, 2008, at 6:48 AM

Our property taxes on our homes might have decreased, but the property tax on business properties have increased considerably. Now who do they think the business owners are forced to pass that increase on to? Along with the 7% sales tax increase. Honestly folks, there was no tax decrease, it just got spread out. Did you know that farm property will no longer be taxed as a farm, but as a small business. Again an increase that will be passed onto the consumer.

I once received a bill that said, Please pay us so we can pay them so they can pay you so you can pay us.

And so goes the tax decrease!

-- Posted by Icareaboutbrazil on Mon, Sep 8, 2008, at 8:44 AM

The key phrase in all of this is:

"Essentially, local governments are slowly being forced to enact Local Option Income Taxes (LOIT) upon its residents," McCullough said. "The tax would be necessary in order to maintain the services entities provide without having to lose employees."

So, drop the services. As a business owner or individual and if the price of something goes up, I have to drive less or I have to take the money from somewhere else. Why should our county or state governments be any different? I don't need those services if I have my money. But, many people use those services. So, I pay for those people to have those services.

Thats not fair. We need *LESS* "service", fewer county employees and lower taxes. Paying $1000 a year for the right to own a $100,000 home is theft. Or, they need to re-write the constitution so that ownership of property is a "privilege upon which requires the payment of taxes". They tax property as if its a privilege now and its illegal, so, why not just make it official?

Anyone ever heard of a "Land Grant Sandwich"?

Taxes promotes class warfare and economic decay. Maybe I should just give up? Sell all my land and house, live in an apartment and suck off the government at every opportunity? I'd pay little tax but get big benefits. Thats what people are doing. Thats why our taxes are going up.

Whats more, they keep raising my sales tax too. Will it never end? Will I have to eventually get on food stamps because they are taking so much from my income that I can't afford groceries? I think that may be the plan.

-- Posted by TheRider on Mon, Sep 8, 2008, at 10:03 AM

Listen to what you are saying "THERIDER", you must be the only person in Clay County that does not want their roads fixed, the sidewalks repaired, more and better police protection, your home and property protected by the fire departments If local government ignored these money eating responsibilities' your taxes would be little to nothing. But what would Clay County be? Lets let the state government do away with ALL LOCAL GOVERNMENT and see what kind of services you will have then, remember the 4 hour waits at the license branch. I know what I am going to due this November, starting with the governor. Any member of state government that voted for this ludicrous bill should be voted straight out of office, I only hope that enough voters will understand what this bill is going to do to this state in 5 years.

-- Posted by lucky on Mon, Sep 8, 2008, at 10:49 AM

Therider:

Just as Icareaboutbrazil stated that businesses who are taxed have to pass along that expense to their customers, don't think that you wouldn't be supporting the government by renting a home. I have a rental in Vigo county and taxes for it went up almost 30% Though not real happy about that, you can count on next time lease is written, the rent will be raised to cover my elevated costs so renters indirectly pay those taxes too. They just don't have the benefit of ownership and accrued equity. Your house would be useless if in center of woods with no public roads or other public property to give it access to the outside world. The presence of law enforcement discourages others to steal from you just by being in existence even though it can't always deter individuals from breaking it altogether. Your schooling and your relatives' schooling is there for you as well so hopefully fewer will be on welfare hopefully. So whether you whether you benefit directly from the "services", such as law enforcement, or you do directly like having a way off your property without trespassing on to other's, you benefit from these "services". Property owners in Clay county are getting off cheap compared to some of the other counties and states. Others pay a lot more than $1000 for $100,000 and they are bound to get local tax as well.

-- Posted by Jenny Moore on Mon, Sep 8, 2008, at 11:04 AM

...and now I see why taxes are so high. You people like it that way. You're the frog in the pan of water. You've gotten used to the temperature and its killing you but you don't even know it.

I guess what I need to do is start using all those resources that are offered by the county to their fullest extent. Since I pay my fair share, I should collect.

I use minimal resources of the county for my place. Maybe some of you use more. Why should it be my responsibility to be involuntarily taxed to support something I may or may not use?

One thing I do use is the road. And Lucky, if you would see my road you'd understand: Its one of the worst in the county. But! You didn't hear me complain, did you? I don't want them to fix it. I don't want them to spend the money. ...cause they'll want to raise my taxes! Its not all that bad. You just have to slow down. (..I know, thats a dirty phrase in todays world, I know...)

Someone must have misconstrued that I didn't want to pay ANY taxes. I'll save the Constitutional speech since I figure it would be lost on people here. I'll just say that there are many things that should not be financed by the county, or, its over financed.

Everything the county does is super fancy. My family has been in Posey Twp for over 150 years, we were family #6, so I'm told. My house isn't marble and stone like the court house but my forefathers paid (in their time) megabucks for a very fancy building. So it is today with our schools. We build luxurious, overpriced buildings for our kids to go to school in. Buildings that if they were compared to our homes (mine's worth about 100k) would quadruple the price at the very least.

In my opinion, we'd be a whole lot better off schooling our children in a tin shed but pay our teachers what they deserve. But, no, we spend tons of money on architecture and then try to employ teachers on the cheap because we can't afford it. We buy a BMW but then go to the corner, cut rate gas station and put cheap, watered down fuel in it and wonder why it doesn't run right. But! Man is it shiny!!! Foolish.

I've told my wife several times that $500 a year isn't too much of a theft to live with. I suppose I'd volunteer to pay that if we were back in the 1850s and they needed money to run the county and weren't already stealing about half that much in income tax. (...of course $500 would have been about $5 in 1850, What do you know. Another HIDDEN tax. But they *CALL* it inflation.)

One nice thing about America. You can try and improve where you live, but, if that fails, you can move. Believe me, I'm considering it. After seeing all the opinions here, I'm seeing people who just don't care about high taxes. As long as the temperature of that water doesn't go up too fast, the frog will boil and die. Politicians are careful. They know this. They keep coming up with excuses to raise the taxes. They will keep it up until We The Frog People complain. So, go ahead and pay your taxes, even though a Land Grant Sandwich might help, you'll never want to do that because they might have to lay off a cop or two.

Several of you commented that my taxes aren't that high, and you're right if you compare them to Vigo county's. After all, they have more social services (welfare or "assistance") programs.

My apologies for such a long post.

-- Posted by TheRider on Tue, Sep 9, 2008, at 8:50 AM

Click. I think that was the stove being turned up another notch.

-- Posted by TheRider on Tue, Sep 9, 2008, at 8:51 AM

Oops, sorry but for some reason I can't view additional comments unless I send a new one.

-- Posted by Icareaboutbrazil on Fri, Sep 12, 2008, at 10:11 AM


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