Property Tax Tweak from House Dems Causes 50% Funding Shortfall, 30% Hike in Income Taxes

Sometimes, you know, when making this utterly, completely, and totally idiotic amendments to legislation, The Hair and his balding crony, Bill Crawford, should actually give some measure of thought to the consequences of what they are proposing.

They have an entire bureaucracy devoted to conducting research and telling them such things, though they apparently do not listen to it.

The Indy Star reports on what they did:

In what Gov. Mitch Daniels called a "half-baked" move, Democrats on Wednesday altered the core principle of his property tax reform plan and based tax caps on household income rather than a home's assessed value.

Since he first pitched his sweeping proposal in October, Daniels has pushed for homeowners' tax bills to be limited to 1 percent of their home's assessed value.
While House Democrats approved that concept last month in House Bill 1001, the legislation that reflects most of Daniels' plan, they changed their minds Wednesday when it came to placing those caps in the state constitution.

Instead, Rep. Bill Crawford, D-Indianapolis, pushed a proposal that would limit a homeowner's tax bill to 1 percent of their household's annual income -- meaning a family that makes the median state income of $44,806 per year would pay about $448 in property taxes. Under Daniels' plan, the property taxes on the median-priced home in Indiana, $104,833, would amount to $1,004 year.

The change was placed into Senate Joint Resolution 1, the legislation that would amend the constitution.

And don't doubt for a moment that Crawford is clueless (as if there could be doubt.

He admits as much himself:

Rep. Jeff Espich, a top Republican fiscal leader, repeatedly questioned Crawford about whether he could demonstrate what financial impact his proposal would have on schools, local government and taxpayers.

Crawford said he couldn't answer those questions because there was no analysis or fiscal data available that compares the incomes of Hoosiers to the value of their homes.

"This isn't based on any empirical data, and we don't have any answers on what this would do," said Rep. Randy Borror, R-Fort Wayne. "Hoosier taxpayers are frustrated with us, and I can see why."

If this is the Democrats' proposal for property tax reform, then The Hair needs to reach up under his rug and pull out a new trick.

This one isn't going to cut the mustard.

I took five minutes with Google and with a calculator, and was able to find monumental deficiencies in their "small change" in the proposed property tax legislation.

Yes, there will be math.

Be brave.

There aren't many numbers, and they pass by quickly.

There are about six million people in Indiana.

The median (or roughly average) per capita income in Indiana is about $32,000 or so.

If, as the Democrats propose, every homeowner was taxed at 1% of their income, then the most that would be generated would be about $1.92 billion.

Of course, not every Hoosier owns a home, so this amount is actually going to be considerably less.

In 2005, property taxes generated about $6 billion for the state of Indiana.

This means that the Democratic plan would create a $4 billion budget shortfall out of the box.

Only one billion of that (using the Daniels estimate of new tax revenue) would be made up by the sales tax increase.

Where is the other three billion dollars that is missing going to come from?

Presumably, since the Democrats have put forward no other plan, they intend for it to be made up by cuts in local budgets.

Can your community afford to have its budget cut in half?

Make no mistake about it, that is what Pat Bauer and Bill Crawford "drew up on a cocktail napkin" (no doubt while tipsy at some lavish party put on by some lobbyist).

House Minority Leader Brian Bosma, R-Indianapolis, said he was "uncertain what they're attempting to do. I understand this was written on the back of a cocktail napkin in the last 72 hours."

Moreover, Indiana's income tax is done at a flat rate of 3.4% across the board.

Increasing income taxes by 1% is giving every Hoosier homeowner a tax increase of about 30% compared to what they were paying before in income taxes.

Of course, it's not quite this simple.

It's probably a good deal worse; a study is clearly going to be necessary to determine all of the consequences (unintended and otherwise) stemming from so radical a transformation of the existing property tax reform proposals.

But if I can figure out in five minutes with Google and a calculator that it is this bad, why couldn't The Hair and Balding Bill?

Maybe they were too intoxicated.

But wait!

There's more!

Not only do they look to create a 50% funding shortfall, not only are they creating a 30% income tax hike on homeowners, but they are also going to include a massive amnesty loophole for certain architects that draw up those expensive designer schools *cough* Jim Schellinger *cough*.

That's what this is:

Crawford excluded all existing debt from the tax caps, which he said would create less of a revenue loss for school districts and municipalities.

Where, exactly, do you think most of the debt for school corporations comes from?

That's right, from bond issues for school construction.

Of late, in Indiana, that often means a "designer school" with some nifty art deco or modern look and an indoor swimming pool.