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Re: Gov Takes a Stand

Posted by Karl on Oct 25th, 2007
2007
Oct 25

It would seem that Governor Daniels has been reading some of my suggestions over at another blog I participate on: Indiana Political Review. There I suggested,

I think the way to do this is to put a cap on the property tax, say 1% of the assessed value of the property. Further, the assessed value must be tied to real-life market values (based on comparables in the same neighborhood, for instance) so as to prevent the assessor from simply inflating the assessments to get around the caps. In order for the government to deviate from the cap level, they would have to make a case to the people of Indiana to adopt the measure in a statewide ballot.

Setting the government’s salary, so to speak, would force them to evaluate each and every expenditure to make sure it is in the best interests of the State of Indiana. In addition to the restraint that such a system would impose on the taxing authorities of this state, this system would promote the predictability of future tax bills. I was hit with a 62% increase during the last few weeks (on top of the 100% increase 4 years ago, that equates overall to a 224% increase from what I was paying just four years ago). I want to be sure that I won’t have to eat another 62% (or worse) next year or the year after that. This system ensures it. The predictability in turn will promote stability in property prices and may even increase the value of homes when buyers can safely project their costs into the future instead of having to discount today’s price in the face of unknowable tax increases in the future. If property values are enhanced, assessed values will increase and the government will enjoy more revenue. Everyone wins in the end.

The current system leads to a Detroit-style Urban Death Spiral, which sort of sounds like a cool amusement park ride, but trust me, it’s not a ride you want to be on.

I am gratified that the Guv has reposed so much confidence in my ideas. 

As they say, all politics are local. And, I think one might also say that local politics often have much to add to the national discussion. I think the approach that Daniels has outlined here will tend to limit government as it will limit the pot of money that the state will have to work with. Property is worth only so much and 1% of its value is available to them. Of course, the other component, a sales tax increase (which will place Indiana among the highest sales tax rates in the nation, especially when you consider cost of living), is less stable and susceptible to change by the legislature at any time. Nonetheless, a raise in the sales tax is exactly the sort of tax hike that gets people all riled up. And, this makes raising sales taxes politically risky. In fact, this is one of the elements that the Fair Tax crowd cites when they are pushing that, to quote our latest Nobel Peace Prize recipient, ”risky tax scheme.”

Oddly, considering its tendency to place obstacles in the way of government growth, this morning (within 48 hours of the plan’s release), the Libertarian Party of Indiana is already running radio advertisements objecting to the plan. They are calling it a tax increase (even though it is revenue neutral) because of the increase in sales taxes (really a shift from property taxation to consumption taxation). One would think that any plan that had the virtue of limiting the size of government would be warmly embraced by the Libertarians. I suppose we should never forget that in politics, the perfect always seems to be set up to be the enemy of the good.

If only we could find a way to rein in spending in Washington.

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