A current property tax relief idea with some appeal is expanding the so-called “circuit breaker” to cap an individual taxpayer’s property taxes. Farm Bureau strongly supports property tax reform; however, we are not convinced that a circuit breaker is the right way to proceed.</p><p>
Much like an electrical circuit breaker in a home is designed to protect against electrical overload, a property tax circuit breaker is designed to protect taxpayers from a property tax overload. The Indiana circuit breaker would provide taxpayer relief when the total property taxes on a property exceed a percentage of that parcel’s assessed value.</p><p>
Circuit breakers give taxpayers the false impression that their property taxes will be permanently capped and never go up. The relief from the Indiana property tax circuit breaker mechanism is dependent on property assessments. Even if your home is capped at a 1 percent circuit-breaker level, your property taxes can continue to increase if your assessed value increases.</p><p>
In the 18 states other than Indiana where a property tax circuit breaker is utilized, the breaker is triggered when a property tax bill exceeds an established share of the taxpayer’s income. This approach limits property taxes to the taxpayer’s ability to pay, a good idea that is lacking in the current Indiana proposals.</p><p>
Circuit breakers also generate concern among local units of government in Indiana. While Farm Bureau encourages restraint in spending by all levels of government, we feel that fiscal discipline should be the result of managing budgets rather than selectively limiting the contribution of favored taxpayers after budgets have been set.</p><p>
Indiana circuit breaker caps are another quick-fix that may quiet some of the taxpayers who are justifiably upset, but it will not address the underlying inequities of Indiana’s antiquated property tax system. Farm Bureau encourages thoughtful property tax reform, not just quick property tax relief.