This Council Veteran Is Skeptical of Tax-Cut Grief

December 31, 2013

Ryan Cummins, an Indiana businessman and former chairman of the Terre Haute Common Council’s appropriation committee, offers a rejoinder to the distressed reaction of local officials who are protesting the elimination of business personal property taxes.

by Ryan Cummins

Business Personal Property Tax (BPPT) represents more than 70 percent of all abatement supported, signed and implemented by a typical mayor and city council. The rationale is that these abatements create jobs at the selected tax-advantaged company. And mayors and council members have argued for years that these abatements do not shift the tax burden to others.

Recently, though, one Indiana mayor stated that elimination of BPPT would, in fact, shift the tax burden to others. Since these two actions — abatement of BPPT and elimination of BPPT — are the same thing, which position is true? Does it shift the burden or doesn’t it?

It does, of course, and that is a mathematical fact. It begs the question of why mayors and council members are okay with shifting the tax by abatement but not by elimination of the BPPT itself.

Here, then, are questions to ask any elected official who maintains that your city cannot get along without the BPPT revenue:

  1. Are property-tax subsidies to golf a basic service? If so, why don’t we subsidize shooting ranges, paintball or horseback riding? Should we send tax dollars to the privately owned golf courses as well?
  2. Are bus rides to Walmart a basic service? If we subsidize the purchase of transportation, should we also subsidize the purchase of shoes, electricity or furnaces, all of which are necessities?
  3. Is operating cemeteries a basic service? If so, do privately owned cemeteries have a claim on property-tax dollars?
  4. Is a swimming pool or skate park a basic service that must be provided by government? Bowling alleys, fitness centers and health spas are all nice activities that add to quality of life; why don’t we pour property tax dollars into these?
  5. Are charitable donations made with tax dollars a basic service of government? And is charity still charity when it is funded with mandatory tax payments?

To capsulize, the mayor of my city recently claimed there would be a loss of $1 million to the sewer utility from elimination of BPPT. Our city government, however, has been taking more than $2 million out of the sewer utility each year for several years and putting it into the general fund. (This is called PILOT or payment in lieu of taxes, a roundabout way of imposing additional taxes.) Why doesn’t the city just stop taking half of this money out of the sewer utility? And if the sewer utility has been able to function with $2 million per year being skimmed away, what’s another million?

The suggestion that local taxpayers must make up revenue lost from the Business Personal Property Tax is predicated on the belief that the money belongs to the government first, then the citizen. So the ultimate question for elected officials this next year is just this: “Do you favor increasing the burden of local income taxes before you cut dollars from a local government budget?

A simple “yes” or “no” answer should be on the record for every mayor, commissioner and council member in Indiana.




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