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Report backs simpler Indiana local tax system

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A new report on Indiana's local income taxes urges state legislators to simplify a system that has seven types of taxes and a two-year lag before the money collected by the state is distributed to local governments.

The Indiana Fiscal Policy Institute report released Monday finds that the local income taxes have successfully lowered property taxes throughout the state since they were started in the 1970s, but that the system has steadily become more complicated, The Times of Munster and The Journal Gazette reported.

"One of the stress points is just the complexity," said Matt Nagle, an analyst at Indiana University's Public Policy Institute, a co-sponsor of the report. "Property tax caps were meant to introduce more simplicity, transparency and consistency and the conversation should be, 'Is there a way we can introduce that simplicity on the (local income tax) side as well?'"

Northwestern Indiana's Lake County is the only one of the state's 92 counties without a local income tax, which range from 0.1 percent to 3.13 percent.

The report found most local income taxes are used to reduce property taxes, though counties are increasingly using local income tax revenue for other expenses.

State lawmakers in recent years have allowed counties to also adopt local income taxes for purposes such as public safety, corrections facilities and economic development.

"Local income taxes are a central piece of local government budgets, but taxpayers should have a level of certainty and clarity in how these taxes are administered," said John Ketzenberger, president of the Indiana Fiscal Policy Institute, a nonpartisan research group.

The report said $1.5 billion in revenue from local income taxes was distributed in 2012 to counties, and that additional $2.4 billion could have been collected if all counties used the maximum rates of between 3 percent and 3.5 percent, depending on the combination used by a county.

Nagle acknowledged it wouldn't be politically possible for all counties to adopt maximum rates. He also said that income tax collections continue to be less stable than property taxes during economic downturns.

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  1. In reality, Lilly is maintaining profit by cutting costs such as Indiana/US citizen IT workers by a significant amount with their Tata Indian consulting connection, increasing Indian H1B's at Lillys Indiana locations significantly and offshoring to India high paying Indiana jobs to cut costs and increase profit at the expense of U.S. workers.

  2. I think perhaps there is legal precedence here in that the laws were intended for family farms, not pig processing plants on a huge scale. There has to be a way to squash this judges judgment and overrule her dumb judgement. Perhaps she should be required to live in one of those neighbors houses for a month next to the farm to see how she likes it. She is there to protect the people, not the corporations.

  3. http://www.omafra.gov.on.ca/english/engineer/facts/03-111.htm Corporate farms are not farms, they are indeed factories on a huge scale. The amount of waste and unhealthy smells are environmentally unsafe. If they want to do this, they should be forced to buy a boundary around their farm at a premium price to the homeowners and landowners that have to eat, sleep, and live in a cesspool of pig smells. Imagine living in a house that smells like a restroom all the time. Does the state really believe they should take the side of these corporate farms and not protect Indiana citizens. Perhaps justifiable they should force all the management of the farms to live on the farm itself and not live probably far away from there. Would be interesting to investigate the housing locations of those working at and managing the corporate farms.

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