This week, the Governor announced he will testify before a legislative committee, an unusual occurrence for a sitting Governor. From the Fort Wayne News Sentinel .
Daniels appearance will before the Ways and Means Committee at 10:00 a.m. Wednesday. The Blogmeister wonders if Daniels is taking this step as the “no residential property tax” proposals are gaining momentum. Something he sad he would “need a lot of convincing” to support. Here is what he’s saying about this idea. From the Indy Star:
Although support is building among some legislators for a plan to eliminate property taxes on homeowners, Gov. Mitch Daniels said Friday that he’ll need a lot of convincing.
The plan reflects “a great goal to have,” but Daniels said he has yet to find any realistic way to accomplish it.
No other state has found a way to eliminate property taxes.
Daniels said he’s not ready to expand the sales tax to services and is unequivocally opposed to raising income taxes to make up the revenues lost by a reduction in property taxes. “I could not find a formula that I thought was responsible in terms of not raising other taxes too much, particularly things that might hurt the economy,” Daniels told reporters in his weekly media availability session.
Still, the governor said he can “in theory” support the concept of businesses paying property taxes while homeowners do not.“I see a special status around homeownership,” he said. “It’s the American dream, the core of it.”
House Republicans on Thursday called for a vote this session on a constitutional amendment to eliminate property taxes for a person’s principal residence.
It’s an idea first pushed earlier this week by Sens. Michael Young, R-Indianapolis, and Brent Waltz, R-Greenwood. Senate President Pro Tempore David C. Long, R-Fort Wayne, called the idea intriguing and promising.
Young and Waltz met with Daniels this week to discuss their proposal and said they were encouraged that the governor is keeping all ideas to cut property taxes on the table.
Daniels said he told the two he’d “look at about anything, with the exception of an increase in the income tax, which I would be very, very strongly disagreeing with because of its effect on working families, small business and the economy generally.”
House Speaker B. Patrick Bauer, D-South Bend, has said lawmakers should focus on Daniels’ plan instead of eliminating property taxes.
Young and Waltz have laid out seven options for replacing the $2.95 billion generated annually by property taxes on homesteads, one of which would increase the income tax. Others include increasing the sales tax, expanding it to new services and implementing a 3 percent transfer fee on the sale of real estate.
House Republicans have said they would support only a sales tax increase or expansion.
Daniels, however, said Friday that although he’s not rejecting anything except an income tax increase, he’s not sold on expanding the sales tax to services.
“I didn’t feel that was a good idea or an idea I wanted to advance,” he said, saying it raises “hundreds of questions” about fairness and the types of services to be taxed that would need to be thought through.
Lawmakers could choose to expand the sales tax to cover such things as legal and medical services, haircuts, massages and transactions between businesses.
Michigan last year adopted an expansion of its sales tax to some services — and repealed it in December, 15 hours after the tax took effect, because of public outrage. Businesses such as baby-shoe bronzers and wedding planners argued that it was unfair and confusing.
If Hoosier lawmakers were to figure out a way to eliminate property taxes on homesteads, Indiana would become the first state in the nation to do so.
Gerald Prante, a fiscal expert with The Tax Foundation, a national nonpartisan organization that follows tax issues, said several states — including Florida last year — have considered eliminating property taxes and backed off because it would have made their state’s sales tax among the highest in the nation and hurt business.
Landlocked Indiana, unlike coastal Florida, could see people go to other states to make purchases, Prante said.
Georgia, he said, also is looking at ways to eliminate property taxes for homeowners.
“It’s an election year, so you’re going to see this type of stuff,” Prante said. “It may not be good fiscal policy, but if it’s politically popular, they’re going to do it.
“Getting rid of the property tax on homeowners and not doing anything for business can be pretty politically smart, but not necessarily what you should do.”
Kevin Brinegar, president of the Indiana Chamber of Commerce, said Indiana “would really stand out,” and not in a good way, if the state were the only one in the nation to exempt homeowners from property taxes.
It would drive business to other states, he said, and would work against some of the other property tax controls that lawmakers are considering, such as referendums on major building projects. Homeowners, freed from property taxes, would have no reason to vote against them, because businesses would be paying the bill, he said.
But Brinegar conceded the idea is gaining steam in the legislature.
“There is more political concern and alarm among the legislators than even we imagined there was or expected there was,” he said. “There’s a real sense we’ve got to do something and do something big, regardless of whether it’s good policy. This is not good policy in our view.”
As a reminder, the Governor will deliver his State of the State Address on Tuesday at 7:00 p.m. It is scheduled to last 30 minutes.