Amid eight Indiana counties that have come up with alternatives to relieving property tax payers, Montgomery County’s plan offers the lowest estimated property tax cut next year — 4 percent according to County Auditor Jeff Dossett.
Dossett certified the county’s local option income tax, where residents will have an additional one-tenth of 1 percent tax on their incomes, July 20. The tax will bring in about $600,000 in property tax relief to the county, said Don Peterson, president of the County Council.
The replacement tax was one of the first to be certified in the state after being approved by a unanimous vote in the Crawfordsville City Council. With the previous 4-3 approval in the County Council, the tax had enough votes to go in effect.
The county got 44.3 percent of the vote, the city got 40.5 percent and each of the small towns got smaller percentages of the vote to decide if the tax would be adopted. As long as a 51 percent majority is reached, the tax passes, meaning once the city and county passed it, it didn’t matter if the small towns voted or not, Dossett said.
The extra tax will start coming out of paychecks Oct. 1, once the Indiana Department of Revenue notifies all employers of the new tax rate. With an additional inventory replacement tax, homeowners should see close to an 8 percent decrease in their property taxes next year, Dossett said.
Peterson said, “What we’re doing is we’re broadening the scope of taxpayers. Everybody can pay a little bit.
“The real estate taxes have gone up so much that the people who own property are paying much, much more than people who don’t own property,” he said. “We’re trying to make things more fair.”
However, the three County Council members who voted against the tax think it might make the situation worse for taxpayers, said County Councilman Terry Hockersmith.
“It wasn’t any real relief, and I was just afraid it would become another pocket for the government to start picking on the taxpayers,” he said.
Hockersmith would rather see a higher income tax than continually increasing property taxes, but decided the small increase the county was suggesting wouldn’t be worth starting another tax, he said.
“We just went with .1 percent, which if you make $100,000 a year, will be $100,” he said. “To me it wasn’t really any relief. I would have to think long and hard if they decided to go with a higher percentage.”
Hockersmith would rather see the state step in and take responsibility for high property taxes, he said.
“I think the state really needs to get in there and fix the problem because it’s totally broken across the state,” he said.
Other counties that have used the state’s permission to adopt new local income taxes to relieve the property tax burden are Brown, Jasper, Jay, Marion, Morgan, Pulaski and Warren, with estimated property tax cuts up to 30 percent for next year.