We've been waiting around all year for THIS?

John Byrne of the Post-Tribune writes an interesting article about the "Great! Grand! Biggest Tax Cut In Indiana History!" that is the Governor's property tax plan.  Final results of this brilliant legislation?  Very little.  He writes:

Too late now.

We know you meant to get to the store earlier, but starting today those goods and services you've been planning to buy just got 1 percent more expensive in Indiana.

The sales tax hike to 7 percent statewide will fund a tax relief package which will drive down residential homeowners' property tax bills about 25 percent this year in Northwest Indiana.

Before you switch from the champagne of beers to champagne, however, keep in mind homeowners will be giving a chunk of that property tax savings back to the government.

The sales tax increase will offset much of the property tax savings, leaving the median Indiana homeowner -- household income about $55,600 and home assessed at $120,700 -- with an overall tax savings of about 1 percent across the state, according to Purdue University economist Larry DeBoer.

Homeowners in areas with especially high property tax rates, like much of Lake County, will eventually see more tax savings because of property tax caps built into the plan beginning in 2009.

Don Ingersoll of Ogden Dunes welcomes the new tax system, which he said will drive down his property tax bill by about $2,000 per year.

"I don't expect to spend that on purchases after a 1 percent sales tax hike, so I'm all for the new set-up," Ingersoll said.

But Hoosier renters will feel the economic pinch.

They won't enjoy any property tax savings under the tax package passed in March by the General Assembly.

Yet they will pay more for everything but food and prescription medicine, which are exempt from Indiana's sales tax.

The median Indiana renter, who has an income of $24,592, will pay 5 percent more in total taxes under the new plan -- $139 per year.

Perhaps dealing with more pressing economic concerns, renters at a Merrillville apartment complex said Monday they hadn't made plans to change their spending because of the higher sales tax.

"I'm dealing with higher gas prices, higher food prices, everything," said Lisa Malo. "This is just one more thing, but dealing with it a couple cents here and a couple cents there, I don't think I'll change my spending habits."

The General Assembly did build savings for renters into House Bill 1001, increasing the renter exemption on state income taxes to $3,000 from $2,500 and the earned income credit for low-income families to 9 percent from 6 percent.

But DeBoer estimated those programs together will save a typical renter only about $40 per year.

And he expects Malo's reaction to be common among Hoosiers.

"Sales taxes nickel and dime people," DeBoer said. "It's difficult to change your spending habits when you can't tell the difference on a typical purchase. Of course, at the end of the year it adds up."

To sum it up, I think it would break down like this:

Homeowners:  More or less equalled out, unless you are rich in which case you see a darn good decrease in your total bill.

Renters:  Sorry about your luck, I guess that's the price you pay for being the "transient" population.  But at least the Governor gave you an extra $17 for the year.

Business owners:  Bend over, you'll be taking the brunt.

I wish this was an April Fool's day joke and that the Governor didn't spend the entire session passing a bill that has minimal effect and only helps the rich people in our state (like the Governor, oh wait, I wonder how much HE saves in taxes now), but that's what happened.  Your Government at work.

Final Note:  For those of you reading this article and thinking that coming out even isn't so bad, remember that this doesn't even take into account the likely County Income Tax that is almost assured to be raised to pay for the Governor's property tax plan.  Still coming out even?

Posted by tdwblog@gmail.com

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