(INDIANAPOLIS) - The latest property-tax relief plan at the statehouse raises both income and sales taxes while giving homeowners deeper tax cuts: Governor Daniels and a legislative study commission have focused on sales taxes to replace property-tax dollars, with the study panel relying on local income taxes for more relief.
Representative David Orentlicher (D-Indianapolis) says the income-tax hike should be statewide. He says one goal of relief should be for everyone to pay the same.
Under the current system, residents of areas with high school or poor-relief costs often end up paying higher rates, while areas with higher property values may pay a smaller percentage. Orentlicher claims a 62-percent cut for homeowners, compared to one-third in Daniels' plan and one-half in the study commission plan. Corporations would see a smaller tax cut, and would actually end up paying more on taxes due to the sales and income tax hikes.
Orentlicher's bill also calls for relief in time for the spring payment, when this year's delayed tax hike is likely to come due. He'd cap next year's bills at one-and-a-half-percent of a home's value. After next year, Orentlicher would cap bills for low-income taxpayers at a percentage of their income.
The Daniels plan envisions a cap based on a percentage of property values. Daniels says he hasn't reviewed the plan in detail yet, but says the income-based cap is a variation on the same theme.
He notes he's already stated his opposition to an income-tax hike as harmful to the economy, but says he's encouraged that all proposals embrace the general principle of cutting taxes, then capping them.
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