Elimination of Personal Property Tax

January,2014

Elimination of Personal Property Tax

Recent LSA memo estimates $1.063 billion of tax revenue would be eliminated…

Legislative Services Agency Memorandum, 12/23/2013

Elimination of Personal Property Tax-Effect

• Circuit breakers to local units (cities, towns, counties,school corporations, libraries etc.) would account for $554

million lost revenue

Legislative Services Agency Memorandum, 12/23/2013

Elimination of Personal Property Tax-Effect

• Tax shift to real property owners would account for $350 million

Legislative Services Agency Memorandum, 12/23/2013

Eliminaton of Personal Property Tax

1. LOST REVENUE

LOCAL LOSS OF REVENUE

LOSS OF REVENUE ESTIMATED BY KOSCIUSKO COUNTY ASSESSOR AND AUDITOR FOR WARSAW CIVIL CITY IS:

$2,214279.28 (11% of General Fund)

REPLACEMENT?•No current replacement

revenue proposed by governor

REPLACEMENT?

•No current replacement revenue proposed by state

Elimination of Personal Property Tax

SHIFT BURDEN to:LOCAL WAGE EARNERS

REPLACEMENT?• State Legislators considering shifting

replacement to Local Option Income Tax- .77% increase in payroll tax for Kosciusko County (-LSA Memorandum 12/23/2013)

Elimination of Personal Property Tax

2. SHIFT TAX BURDEN

Eliminaton of Personal Property Tax

23% of Current Assessed Value attributable to personal property tax

Eliminaton of Personal Property Tax

Assessed Value will go down and tax rates will go up

“

Elimination of Personal Property Tax

“With the levy limited and assessed value smaller, most tax rates would go up. Personal property owners would pay less, but higher tax rates would shift this tax burden to everyone else “

Larry DeBoer, “What Happens if We Eliminate Property Tax on Business

Equipment” 11/27/2013

Eliminaton of Personal Property Tax

SHIFT BURDEN to:LOCAL HOMEOWNERS

Eliminaton of Personal Property Tax

SHIFT BURDEN to: LOCAL BUSINESS OWNERS

LOCAL SHIFT

Approximately $775,000 will be shifted directly to real estate property taxpayers, both residential and commercial

Eliminaton of Personal Property Tax

3. LOSS OF LOCAL ECONOMIC DEVELOPMENT TOOLS

Loss of E.D tools

Currently, ABATEMENT give local Redevelopment Commission the flexibility to phase in or eliminate personal property tax on a case by case basis.

Loss of E.D tools

Currently, local Redevelopment Commissions have the flexibility to directly invest personal property tax increment into favorable investment for the developer (ie Winona PVD, Medtronic)

Loss of E.D tools

Elimination of Personal Property Tax eliminates an already limited Local Economic Development Tool Box of yet another incentive.

Does this help meet the original goal of improving Indiana business climate by eliminating PPT?

Loss of E.D tools

One proposal gives counties the ability to opt out of PPT individually… pitting counties against each other, destroying the synergy of regionalism

Does this help meet the original goal of improving Indiana business climate by eliminating PPT?

Position

• We are opposed to the elimination of personal property tax, in part or in its entirety, over time or immediately, without guaranteed, complete income replacement.

“REPLACE NOT ERASE”