July 23, 2014 at 2:10 p.m.
Consensus forming on tax overhaul? (07/30/07)
Editorial
Strangely enough, amid the festival of finger-pointing over property taxes, a consensus seems to be developing.
It is, to be sure, a broad consensus and a long way from anything like a detailed new tax structure for Indiana.
But there are some things people are beginning to agree upon.
Essentially, when it comes to raising revenue for government, there are three main targets for taxes: What you own, what you consume, and what you earn.
Property taxes target what you own, and the problem today is that a market-based assessment system doesn't have any link between how much a person is taxed and their ability to pay. Think of senior citizens in places like Marion County where home prices have skyrocketed while incomes have remained fixed.
Sales taxes and "sin taxes" target what you consume. The more things you buy, the more cigarettes you smoke, the more you pay in taxes.
Income taxes target what you earn. And in Indiana, that's based upon a fixed percentage rather than a graduated tax like the federal income tax.
The consensus that seems to be forming is that a fair tax system ought to be based upon one's ability to pay.
That means a shift away from property taxes toward higher sales taxes and, probably, a graduated income tax that hits higher-earning households a bit harder.
What Hoosiers want are taxes that are predictable and affordable. What has them upset are property taxes that yo-yo based upon legislative whims and catch them by surprise.
Shifting toward a graduated income tax and a higher sales tax, while limiting property taxes would be a step in the right direction.
Can it be accomplished? That's hard to say. It's one thing to reach a broad consensus and something else again to draft tax legislation.
The worst case scenario - always a possibility when politics is involved - would have yet another intricate, contradictory layer of tax policies superimposed over what's already in place. The one thing the system doesn't need is to become more complicated than it already is. - J.R.[[In-content Ad]]
It is, to be sure, a broad consensus and a long way from anything like a detailed new tax structure for Indiana.
But there are some things people are beginning to agree upon.
Essentially, when it comes to raising revenue for government, there are three main targets for taxes: What you own, what you consume, and what you earn.
Property taxes target what you own, and the problem today is that a market-based assessment system doesn't have any link between how much a person is taxed and their ability to pay. Think of senior citizens in places like Marion County where home prices have skyrocketed while incomes have remained fixed.
Sales taxes and "sin taxes" target what you consume. The more things you buy, the more cigarettes you smoke, the more you pay in taxes.
Income taxes target what you earn. And in Indiana, that's based upon a fixed percentage rather than a graduated tax like the federal income tax.
The consensus that seems to be forming is that a fair tax system ought to be based upon one's ability to pay.
That means a shift away from property taxes toward higher sales taxes and, probably, a graduated income tax that hits higher-earning households a bit harder.
What Hoosiers want are taxes that are predictable and affordable. What has them upset are property taxes that yo-yo based upon legislative whims and catch them by surprise.
Shifting toward a graduated income tax and a higher sales tax, while limiting property taxes would be a step in the right direction.
Can it be accomplished? That's hard to say. It's one thing to reach a broad consensus and something else again to draft tax legislation.
The worst case scenario - always a possibility when politics is involved - would have yet another intricate, contradictory layer of tax policies superimposed over what's already in place. The one thing the system doesn't need is to become more complicated than it already is. - J.R.[[In-content Ad]]
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