The auditor, treasurer, and assessors have been bugging since 2002. By bugging I mean increasing their take of homeowners’ disposable income. Trending is the new friend of the auditor, treasurer and assessors. Trending is a yearly adjustment to properties showing increases in value to prevent the sticker shock. Trending was used by assessor to increase homes value to the market value even if these homes were not selling in certain neighborhoods. Because the state would no longer cover up for local government by increasing property tax replacement credit, local government had to either cut their budget or increase the amount of funds they collected from property owners. Local government decided to increase the burden on residential property owners.
Local government eliminated inventories tax on businesses, the state limited property replacement relief, homestead credit was reduced, homestead deduction increased to reduced the assessed value for tax purpose, and trending of property to capture early market value of certain property that were not selling during the reassessment.
Trending was applied for the first time in 2007, impacting city residents. Aboite’s residents saw an increase of 57%. But, Allen County resident were blinded to their own sticker shock by Aboite’s increase, failed to see their own increase of between 12%-14% as a doubling their own tax burden.. The increase of 12% -14% for Fort Wayne residents occurred after Indiana General Assembly pledged over $550 million for tax relief. The first $300 million would be available in a tax rebate check in 2007 and the second $250 would be available in 2008.
With the first $300 million, the General Assembly purpose was to reduce the estimated increase of 24% of homeowner tax bill down into the range of 7.7%. Fort Wayne local government added on assessed value through trending to receive a windfall between 4.3% to 6.3 % . Fort Wayne residents’ bills were doubled just like their new neighbors in Aboite even after they receive a rebate check averaging only $235 later in the year from these increases. The $235 rebate check is a symbolic gesture from the State of Indiana to local residents on saving that the state has been providing relief while local government kept all the increases. However, the State does not have the money but will receive fund from the sale of slot machine licenses to two race tracks called racinos.
Local government hid the state tax relief to stack on top of the projected increases that will occur in 2008. In 2008, the homestead credit will remain at $45,000, but will be reduced at $1000 a year for 5 years in hopes of stabilizing the homeowner tax bill As long as local government can get the state to provide property tax relief to homeowners, it starves off local government from shift some of the tax burden on increases businesses.
Local government will have to go to local income taxes without the state offering the $45,000 after 2009. Three new local income tax options to fund the annual increase in civil government property tax operating levies. The first is to increase local income tax, the department of local government finance would determine the income tax rate required to operate the government with fund a levy increase. Second, COIT Council can adopt an income tax to reduce property taxes. The maximum rate is one percent. It can be used to increase the property tax replacement credit. It can be used to increase the homestead credit, for homeowners only. Or it can be used to provide a credit to homestead and residential rental property.
Third the council can adopt an added income tax to raise new revenue for public safety. Public safety , meaning police and fire, emergency medical services, correction and juvenile services and includes current operating costs, debt service and pension obligation. The maximum rate is 0.25% and counties must adopt the two property tax relief income taxes to be allowed to adopt the public safety rate. The deadline is August 1 for tax year 2008 payable in 2009.
Because local government is aware that they will have to use one of the three they are using trending to increase the value of property at this time. How much taxpayer benefit from going to an increase in income tax depends on how much property Is owned, what residents earn, where residents live and how their county decides to distribute tax relief. You better believe that the public safety component will be a big incentive for those seeking reelection.
The taxable income and property assessed value of a taxpayer with determine how hard high income earners will be hit with the income tax increase. If a taxpayer with more income and less property will tend to pay more income taxes. People who will pay more will include renters, teenagers, right along side employed homeowners. Unless the employed homeowners assessed property value is more than their taxable income. These lucky individuals will pay less with will include farmers, retired homeowners and property owners who live outside the county.
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