In that time, many residents have inquired about whether the additional income tax would be more than they would save on residential property taxes.
In reviewing the figures, The Brazil Times discovered it is dependent on each individual situation.
With the wide array of tax rates among the county's 23 taxing units, the highest (Brazil City-Brazil Township -- 2.8062 dollars per $100 of assessed value) and lowest (Lewis Township -- 1.4045) rates from the 2008 pay 09 tax year were taken into consideration.
For Brazil City-Brazil Township, the median house/condo value in 2007 was $76,224; meaning with the 1 percent residential property tax cap next year, the maximum property taxes the average resident in this area would pay is $762.24. Assuming a resident is receiving only the standard deduction (one-half of the value, up to $45,000) the net value of the home ($38,112) multiplied by the rate results in the potential to pay $1,069.50 in property taxes, meaning the 1-percent cap would save $307.26 in property taxes on the home.
The median household income in this taxing unit is $33,866, meaning the maximum impact of the LOIT on gross income would be $338.66, but Clay County Auditor Mary Jo Alumbaugh explained the resident(s) in this example would not have to pay that much.
"The LOIT is taken out on adjusted net income, not gross," Alumbaugh told The Brazil Times. "To determine the actual amount a household would pay through the LOIT would be difficult as each resident and employee have different deductions and number of exemptions coming out of their gross pay."
However, the figures drastically change should the individual(s) not have a standard deduction on the property.
In this situation, the resident(s) would potentially pay $2,139 in property taxes, meaning they would save $1,376.76 when the cap kicked in. Subtracting the LOIT from this figure shows a savings of $1,038.10 in total taxes on the home.
According to information provided by the Clay County Auditor's Office, there are a total of 4,406 properties in this taxing unit, while approximately 40 percent (1,759) are receiving some sort of deduction on property taxes.
This means for every two "average" residents in this area paying $31.40 in additional taxes, there are three saving $1,038.10, exemplifying the report from Umbaugh and Associates, Indianapolis, that the city would be taking a loss between $200,000 and $250,000 the next couple of years. This, however, does not factor in the impact on other properties that would fall under the 2- and 3-percent caps.
"With additional rates, like for fire and police to name a few, cities are really the only places where the total rate is high enough for the circuit breaker to create a large impact, especially when residential deductions and exemptions come into play" Alumbaugh said.
Lewis Township, which had the lowest tax rate this year, is a perfect example of this.
With a median house/condo value of $81,609 and median household income of $39,552, the "average" household in Lewis Township would pay a maximum of $816.09 in property taxes under the cap and $395.52 in additional taxes through the LOIT.
Those in this area who have a standard deduction on a homestead would pay approximately $573.10, which is $242.99 less than the amount due with the 1-percent cap, meaning this individual is already catching a tax break. When the LOIT is factored in, this individual would pay a maximum of $152.53 more in total taxes if the entire 1-percent cap amount had to be paid.
Meanwhile, those without a standard deduction in Lewis Township would have the potential to pay $1,146.20 in property taxes on the "average home, which is $330.11 more than the amount with a 1-percent cap. With the LOIT in this situation, the total taxes paid would be $65.41 more than the property taxes due with the 1-percent cap.
However, Alumbaugh told The Brazil Times, the funds collected through the 1-percent LOIT, would create a type of Property Tax Replacement Credit in the future.
"The LOIT increased the percentage taken out of paychecks under the County Adjusted Gross Income Tax, and is collected in a lump sum," she said. "One-quarter of the one percent is going toward public safety, while the rest creates a revenue stream to offset property taxes."
Alumbaugh added that in upcoming years, the remaining three-quarters of the 1-percent LOIT would be factored in when computing tax rates.
"We will have to calculate it twice, once countywide, then again for each individual taxing unit," she said. "These calculations will then be prorated against the standard rates, which will then lower tax rates, and most likely, lower property taxes even further."