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EYE ON THE PIE: Give tax relief to those who truly need it

September 24, 2007

No topic brings me more mail than property taxes. Some of this mail is silly, some is tragic.

Many writers are concerned that they or their neighbors will lose their homes because of propertytax increases. This is a serious, legitimate concern. However, it is not a reason to abolish property taxes.

Those who are hard-pressed to pay their property taxes are not different from those who have problems paying utility bills, medical bills, and the costs of other necessities. These are hardship cases. Should we do more than try to relieve the current hardship? Should we try to sustain people in homes they can no longer afford?

Government is blamed for forcing people out of homes where they have lived for many years, homes in which they raised their families. Sentiment paints these folks as tottering, elderly women. Yet we do not know the facts. How many are truly at risk of losing their homes?

Let's not set inflexible rules about eligibility so that poor people under 65 are not considered worthy of relief.

Let's audit the income and asset statements of these hardship cases. Some people with little income are sitting on handsome retirement accounts but are unwilling to tap them.

Let's not lower property taxes for all of us because there are some with legitimate hardships. Joe Gomeztagle, the man from St. John who helped rid Indiana of its unconstitutional, unfair property-assessment practices, says we are going through a "transitional stage." People were surprised by their tax bills because they did not listen when assessors and others told them there would be major adjustments for homes that were under-assessed in the past. Most folks had no idea and wanted to know nothing about "trending" until the newest assessments were released. Now, people are calling Joe to find out what is going on.

Instead of working to correct specific problems, ax-wielding radicals want to eliminate property taxes entirely. What will we get instead? Much higher sales and income taxes will be needed to offset $6 billion in property taxes. Is that what you think you want?

Some in the Legislature want to apply a Band-Aid to the problem. They suggest a minor (1-percent) increase in both sales and income taxes to give everyone property-tax relief. Why? If there are problems, address those problems. Let those who feel afflicted by inappropriate assessments come forward and make their claims heard. Let those who find it virtually impossible to pay their property taxes prove their cases.

Let's not develop a new set of welfare recipients. There are ways to handle the problem. For example, taxes can be paid through reverse mortgages. Lenders (including charitable organizations) can pay the real estate taxes and receive those funds, plus interest, when the house is sold at the convenience of the owner. That gives people time to adjust to the reality that they may no longer be able to live where they lived in the past.

Government has a major responsibility here that has been neglected. Officials fail to explain spending adequately. They say, "Oh, we held public meetings and no one came." That's not enough. Governments must obtain the active support of citizens for public projects. The time has come to simplify public accounting and make budgets understandable to people who know how to score a bowling card.



Marcus taught economics for more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. To comment on this column, send e-mail to mmarcus@ibj.com.
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