IRS Tax Support

Governor: Move Might Be Possible In Few Years

Gov. Mitch Daniels, who has long said scrapping all property taxes would be impractical, said Friday it could be possible to repeal property taxes for just homeowners in a few years.

As for those lawmakers who don’t want to wait a few years to make such a repeal, Daniels said he’ll listen to them. “If the Legislature can gather a majority for a way to do it now, I’ll be happy to work with them on that,” Daniels told reporters.

Some groups have called for a complete repeal of property taxes — including those on rental and business properties. Daniels has said that repealing all property taxes wouldn’t work because sales and income taxes would have to rise to an unacceptable level to compensate. But Daniels said Friday that repealing property taxes only for homeowners is a more plausible idea. For now, Daniels — prompted by residents’ discontent over soaring property tax bills — has been proposing relief that centers on taxation limits. Homeowner property taxes would be capped at 1 percent of a home’s assessed value beginning in 2009, with limits of 2 percent for rental property and 3 percent for business property. Some replacement revenue would come from raising the state sales tax from 6 percent to 7 percent. The state would assume the remaining 15 percent of school operating costs it doesn’t pay for, school transportation costs, and care for neglected, abused and delinquent children — all things largely funded by local property taxes. Daniels said Friday he would testify for his plan in the House Ways and Means committee Wednesday, a day after his State of the State address, which will primarily address property tax issues. Governors rarely testify before the Legislature. This will be the first time for Daniels. “I didn’t (decide to testify) lightly, because I think it’s a precedent that you don’t want to lightly set,” said Daniels, a Republican. “But this is a unique situation of special importance to taxpayers and, therefore, to me. And so I decided to break with past practice and make this exception.” Democrats on the committee said Daniels’ testimony could help sell his plan. They said he needs to sell it well because hearings conducted around the state revealed opposition to many parts of his proposal, including his desire to cap houses, rental units and businesses at different rates. “That is very unpopular, and many people feel it discriminates,” said state Rep. Dennis Avery, D-Evansville.The State of the State address is Tuesday at 7 p.m. 6News will have a special one-hour edition of 6News at 7:00 on that day.

The Indy Channel