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Sunday, October 17, 2004
Indiana Law - More on proposed constitutional amendment
The Mooresville/Decatur Times had a story yesterday on the proposed constitutional amendment re taxation. Some quotes:
Indiana Sen. Richard Bray (R-Martinsville) explained that after the Indiana Supreme Court ruling that changed Indiana’s property tax assessment system to the current “fair market value” system, along with the General Assembly opting to give counties the power to abolish inventory tax, the Constitution had to change to support those changes in law.Bray explained that presently, Indiana’s constitution directs the General Assembly to tax property, including those things held for sale, so abolishing the property tax is potentially unconstitutional, since the idea of “fair market value” is to be fair.
“The State Supreme Court said it has to be even and uniform, and it isn’t,” Bray explained. * * *
“There is a question as to the constitutionality of the Homestead exemption, the elimination of the inventory tax or the assessment of farmland for less than market value.
“Because of the Indiana Supreme Court’s ruling, I’m not sure we can give a Homestead Credit, because that’s potentially unequal,” Bray explained.
Bray said that by amending the Constitution, it would explicitly give Indiana’s legislature the power to make those changes, even if some have not yet been challenged in court, like the assessment of farmland at a much lower rate that open ground that is being developed for homes or commercial value.
“So, are you going to say every farmer that is close to an urban area should have to pay subdivision (tax) prices? That could come up,” he said. * * *
Bray said that other challenges could also include tax abatements, a popular economic development tool with communities like Mooresville, that has been used to draw large companies like TOA, USA, to the area.
“That (abatements) probably doesn’t fit the constitutional test either,” he said.
Abatements allow businesses to pay less tax on their building and equipment initially, gradually paying more and more each year until, at the end of the abatement, typically 6-10 years, they pay the full tax rate.
And eliminating the inventory tax means large warehouse operations, several of which are located in the Plainfield area, would be more inclined to move to the state.
“It’s an incentive (for businesses) to move into the area,” Bray said. “Without (the changes) that might be unconstitutional.”
Posted by Marcia Oddi on October 17, 2004 03:55 PM
Posted to Indiana Law