C.L. Coonrod & Company Article

Impact Of Property Tax Reform On Commercial Property
WFYI Indiana Week In Review
September 9, 2011
Which Panelist Had the Right Answer?

If you watched the September 9, 2011, installment of WFYI’s Indiana Week In Review you saw the panel struggle with the question, how could the property tax reform cause commercial taxes to increase? The example given was a commercial owner in an Indiana city, who was selling his property on E-Bay because he could not afford the tax.

If these Statehouse insiders are puzzled over the impact of tax reform, is it any wonder local officials and taxpayers are confused as well?

Lesley Weidenbener had the right answer. The increase in commercial property tax is NOT caused by the rate caps. It is true that the 3% rate cap on commercial property does not protect commercial property tax payers as effectively as the 1% cap on homesteads, but the caps themselves do not cause the increase.

Instead, the increase is due to the 35% homestead deduction. Since 2009, practically all homeowners have received 35% off their assessments. If homeowners pay less, and government levies stay the same, other taxpayers must pay more. The result is higher taxes for commercial, industrial, rental, and other property.

See also our 2008 article on why the tax reform resulted in higher rates and a shift of tax burden to non-homestead taxpayers.

One of the panelists suggested that the commercial property tax increase might be due to levy creep caused by local government units trying to overcome the 1% cap on homestead property. However, the levy controls make such levy creep impossible. Referendum levies can be outside the caps, but these do not discriminate between commercial and homestead property.

If you have questions or would like further information, please contact us at: Coonrod@Coonrodcpa.com

09/15/11

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This article is intended to provide information of general interest to local government officials in Indiana. The information is not guaranteed to be applicable or appropriate in particular circumstances. Local officials should consult competent professionals before acting on any information contained in this article. We are not attorneys. Advice of a legal nature should be sought only from qualified attorneys.

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