MARCUS: Let’s reassess reassessment

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Gordon Garble and I are meeting for breakfast.

Gordon orders the Everything Skillet: two eggs, Swiss cheese,
hashbrown potatoes, ham, bacon, onions, green pepper and mushrooms, all topped by sausage gravy—with
a side of three banana pancakes. I have the same, only to be friendly.

"I’m thinking
about running," he says.

"Exercise might be helpful," I say.

"No," he says,
chuckling. "I’m thinking about running for the Legislature."

I say. "You’re perfect for the job. You can fix on an idea and hold to it despite all evidence and
argument to the contrary."

"Thanks," he says. "I want to change the basis for property
assessment in Indiana."

"Didn’t we just go through that in the past few years?" I ask.

"Yes," Gordon replies, "but we got it wrong."

"How so?" I
ask as our food arrives, carried by a waitress and a busboy.

"The Indiana Supreme Court required that
an objective measure be used," he answers. "But why does that objective measure have to be tied to the value of

"Because," I say, putting down my loaded fork, "over the centuries,
since the first property tax was imposed, the value of property has been considered a proxy for the ability
to pay. Believe it or not, governments all over the world, from the earliest times, have been interested
in protecting the poor."

Gordon lowers his fork. "Fine," he says, "but isn’t it time to think in broader, yet simpler terms?"

We look at each other. An argument is about
to begin and neither of us want a heated dispute to replace a hot breakfast.

"Tell me what you have in mind," I say quietly.

"Well," he replies with equal emotional control, "there was a time when assessments
were simple. The tax official counted chickens and cows and acres of land. Each physical unit was taxed
at a certain rate: so much per hog, so much per horse.

"Why not get back to that simplicity? Let’s tax structures (houses, barns, factories, offices,
stores) by cubic footage. A single rate per cubic foot, regardless of how the building is used or who
owns it."

sure is simple," I say. I did not say that I thought it was simple-minded; I wanted to continue my breakfast and defy
my cardiologist.

beautiful," Gordon beams. "It’s not new; something like cubic space was in use in many countries in earlier times.
But this works for our time because it also meets our environmental concerns. The larger the structure,
the more resources used to build it and the more energy needed to heat and cool it."

"But what if I heat with an efficient source
and you heat with an inefficient one?" I ask.

"Then I would still have an incentive to change my energy source," he says. "The
larger structure takes more energy than the smaller one regardless of technology."

"And land?" I ask. "How would
you tax that?"

he says, "I would look at acreage and use. If the land were used for forest or purely natural purposes, it would
have a very low tax rate. If used for crops, the rate would be somewhat higher. A much higher tax would be levied on grass
and the highest tax would be charged for pavement."

"So as long as land use did not change, taxes would not change," I say.

"No," Gordon says. "So long as
land use did not change, the base would not change. The tax rate and collections would rise or fall depending
on government spending. But the process of assessment would be simplified while done uniformly and inexpensively
by computer analysis of satellite photographs."

"It won’t fly politically," I assert. "What controls will there be on local spending?"

Gordon looks at me as he cuts his pancakes into
strips. "Oh," he says, "something the General Assembly does not believe in—something
called ‘local democracy.’"

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. He can be reached at

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