The Orentlicher Plan for Property Tax Relief

Press Release

Affordable, Fairer and More Predictable Taxes

The Orentlicher Plan will cut property taxes for Hoosiers by $2.5 billion so they become affordable.

Homeowners and renters will see a reduction of nearly $2.3 billion—a cut of 62 percent—and a reduction of their total taxes by almost $700 million. For homeowners whose property taxes doubled this year, the entire increase will be rolled back, and their property tax bill will drop another 24 percent below last year's amount.

Immediate relief

The full proposal will take effect starting with the 2008 property tax bills. To provide immediate relief, 2007 property taxes will be capped at 1.5 percent of assessed value for homeowners.

Greater fiscal restraint & accountability

The plan will cut $400 million in government spending by transferring child welfare and other local costs to the state budget and absorbing those costs without a tax increase.

To further contain spending and increase accountability, the plan will require a county's board of tax and capital projects review to sign off on total property tax rates, after full public consideration.

Fairer balance between individuals & corporations

The plan cuts property taxes for homeowners and renters by another $300 million by limiting the reduction in property taxes for corporations. This will restore fairer balance between individuals and corporations.

Fairer taxation of homeowners & renters

The plan also cuts more than $1.7 billion in property taxes for homeowners and renters by substituting fairer taxes. Everyone pays the same state sales tax rate and the same state income tax rates, but some people pay more than twice the property tax rate that other people pay. Under this plan, property taxes will be reduced with a one-percent increase in both the state sales tax and the state income tax.

Taxes will be much fairer because tax rates will vary less from one township to another, and a person's taxes will be much more predictable from year to year.

To preserve stability in budgeting, the new sales tax, income tax and corporate tax revenues will go into a property tax relief fund. This will prevent diversion of the revenues to other uses, and it will ensure that surpluses in some years are stored for years in which revenues decrease.

Overall reduction in taxes for homeowners & renters

For every dollar in property tax relief for homeowners and renters, 18 cents will come from fiscal restraint, 13 cents will come from businesses, and 69 cents will come from individuals.

For homeowners and renters:

* $2.27 billion — property taxes go down
* ($960 million) — new income taxes
* ($610 million) — new sales taxes
* $700 million — NET SAVINGS

For corporations:

* $200 million — property taxes go down
* ($500 million) — new income & sales taxes
* ($300 million) — NET COST

People on fixed incomes

To fully protect persons with low or fixed incomes from unaffordable property tax bills, property taxes will be capped when they exceed a certain percentage of the homeowner's income (for example, no more than 1 to 4 percent of income when income is below $30,000; no more than 5 to 6 percent when income is between $30,000 and $60,000).

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