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[r23] Friend Report: The business personal property tax
Start Date: 2/14/2014 All Day
End Date: 2/14/2014
Entry Description
The business personal property tax

I am really sorry to start a column this way, but this winter weather has really worn most of us out!  Repeated heavy snow, sub-zero temperatures, drifted roads and driveways, missed school days and delayed deliveries of most everything is causing all of us to wish summer would be here sooner rather than later.  In short, all of these conditions weigh on every aspect of our daily lives.  If transportation is at a standstill, then businesses, services and schools are as well.  

Our church could only have services twice in January because of the inclement weather and poor driving conditions.  Schools have missed countless days, and they will have to make many difficult decisions about how to make up the time to the benefit of the students.  We have not seen a winter like this for many years. 
Please remember to appreciate those workers who are out there clearing snow, delivering mail and papers, providing emergency services and those caring for livestock in this weather.  They have difficult and sometimes dangerous jobs to do, and I applaud their efforts.  I hope you do as well.

After speaking with my neighbor, who is in the LP gas business, she told me that the price of LP has declined somewhat.  After some of us began shining the light of fairness on the situation, strangely the price began to come down.  My supplier had paid as much as $5.40 per gallon for a truck load.  She is now charging $3.85 per gallon to her customers, so the situation is improved.  However, three dollars and eighty-five cents per gallon is still double the price of last October.  Hoosiers, many on fixed incomes, are being forced to pay exorbitant prices so that the U.S. can be the largest exporter of LP gas in the world.  This situation does not feel or smell right!  Indiana citizens are being gouged by these prices, and I hope we can take some action to correct the situation.  And, remember I am a free market guy, but this is just not right.

We are halfway through this short session, and it seems to be moving at warp speed.  House Bill 1001 has attracted a lot of statewide attention and unfortunately gross misinformation.  First and foremost, the bill is a local option by the income tax council in each county.  The legislation does not mandate that business personal property taxes be eliminated.  The option in the bill only applies to new investments, like equipment, being purchased and brought into the county.  For the business property currently on the tax rolls and continuing to be used, the tax revenue would be unchanged.  Also, the bill allows the county to rescind the tax reduction if it so chooses.

Here is a timeline that may calm some nerves.  The effective date of the bill is July 1, 2014.  If a county adopts the exemption for business purchases new equipment, said equipment would not be assessed until March 1, 2015 with taxes not paid until May 10, 2016.  The purpose of this bill is to entice companies to move to our area and create jobs.  The purpose is not to further punish local governments and schools by reducing their revenues.  I have written a lot about our ongoing problem with a chronically high unemployment rate.  Putting people back to work will cure many of our local government revenue ills, in fact, much faster than tax adjustments or programs.

If the counties of Cass, Fulton and Miami each adopted the program of HB 1001, the estimated annual deduction would be as follows:

Cass:      $465,000 or 1.8% revenues
Fulton:   $200,000 or 1.4% revenues
Miami:   $228,572 or 1.5% revenues

These numbers are assuming an annual net business personal property tax reduction of 12.5 percent on non‐utility taxes. The bill doesn’t affect utilities as taxable units. These estimates also do not make adjustments for additional employment and taxes paid or additional improvements to real estate and property taxes paid, which all could boost the bottom line for cities and towns who would have this tax option available to them and used as an incentive for businesses to invest in the economy. 

I don’t want to saddle local governments with mandated cuts and having to do more with less. What I do want is for jobs to be located in our community and for Hoosiers from north central Indiana to fill those vacancies for years to come. This is not a discussion about eliminating the business personal property tax.  It is a discussion about additional tools to help with job creation.

More later,

Bill Friend

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