why property tax repeal won't work

hat tip tdw, this one paragraph from the fort wayne journal-gazette says it all:

Hoosiers are most likely best served by a reasonable mix of various taxes and user fees, and that mix may well be out of balance. Data compiled by the Federation of Tax Administrators shows that in 2005, 35.8 percent of Indiana's state and local revenue came from property taxes, above the national average of 30.6 percent – and that number has likely risen since 2005.

emphasis mine. more than a third of the state's income comes from property taxes. that's an enormous amount of money, and a huge chunk of the budget.

if we repeal or even modestly trim back property taxes, we have to do something to offset the lost revenue: either cut spending, raise other taxes, or both. the legislature is not going to cut a third of its budget this year. ain't gonna happen. which leaves raising other taxes: the ones that are named most often are sales and income taxes. yet some in the legislature are reluctant to raise the sales tax by even one percent, because that would make indiana's sales tax higher than neighboring states. they definitely won't want to raise it 2-3% or more.

whatever taxes you raise, you're going to end up with "winners and losers", as niki kelly says. niki did the math, looking at the daniels and kenley plans for cutting property taxes (not repealing, just cutting), and discovered that she'll actually pay more taxes under both plans. multiply the numbers in niki's article by about 3 to get a glimpse of what would happen if property taxes were repealed. retirees living on fixed incomes might make out pretty well, and the people who live in half-million dollar houses on meridian street might be a bit better off, but those of us who work and buy stuff would be hit pretty badly.

so in a way it's good that mayor-elect ballard is backing away from his promise to support repeal. other than eric miller, he was the state's highest-profile proponent of repeal, and if he now realizes it's impossible then hopefully the whole "repeal movement" will die down. (i've been getting a lot of guff over at abdul's place for pointing out ballard's flip-flop. most of them just tell me i'm stupid, which is pretty typical over there, but one of them calls me "stAllidiot!", which i quite like. they seem to believe that ballard hasn't flip-flopped and actually will lobby for repeal in the future. i guess we'll have to wait and see on that one.) ¶