Wednesday, January 20, 2010

Indiana will vote on Property Tax Caps

State law already limits a homeowner’s property tax bill to 1 percent of the assessed value of the home. The caps are 2 percent for farmland and rental property and 3 percent for businesses.

The caps are expected to save taxpayers more than $400 million this year. But they also mean local governments and schools have less money available to provide basic services.

Schools are allowed to raise taxes through a referendum, and those increases are held outside the cap.

Local units of government such as counties and cities also can generate additional revenue with local option income taxes.

Gov. Mitch Daniels and many Republican legislators have been pushing to put the provision into the Indiana Constitution for two reasons: to ensure it isn’t challenged in court and to reduce the likelihood that future lawmakers would eliminate the caps.