Of Vanishing Neighborhoods and Growing Opportunities.
"Let me tell you how it will be
There's one for you, nineteen for me
'cause I'm the taxman,
yeah, I'm the taxman
Should five percent appear too small
Be thankful I don't take it all
'cause I'm the taxman,
yeah, I'm the taxman"
Marion County's tax nightmare may be Hamilton County's boom. That's right....Washington Township - Marion County's massive tax woes may end up becoming a benefit for Hamilton County. After a short time of having the full impact of the new propety taxes in place, the calls are already coming in from individuals who are seeking relief. There are many areas of Indianapolis affected but one that seems to have been hit especially hard is the Meridian Kessler/Broad Ripple area. More precisely, the Washington Township geography that sits in the Indianapolis Public Schools district. Since school taxes account for 55% of the property tax total, IPS revenue requirements are significant to those who live in its jurisdiction. Now, many of these homeowners are contemplating moving north of the Marion County line.
In looking at just a few examples, it's easy to see why people are fed up. In Carmel's burgeoning Arts and Design District, a $150,000 home recently sold will pay $1680 total in property taxes in 2007 for the tax year 2006. A similarly priced home at 5600 north in Marion County's Washington Township will now pay $3940 for essentially the same square footage. While no one seems to have been fully aware of the consequences of last year's legislative actions regarding taxes, the results will end up being devastating. In shifting a portion of the tax burden from business to residential, the goal was to be pro business and encourage future growth. The timing was not well thought out. I suspect it will end up being a moment that haunts us for years to come.
For starters, the psychological impact of the tax increases is already in the minds of the consumers. You can't close that Pandora's box. Then you move on to the practical side where prospective purchasers can no longer qualify for homes based on how much higher the monthly tax bills will be. Finally, there's the burden to the sellers who must credit back all taxes due to purchasers at a potential closing on the sale of their home, possibly in the thousands of dollars.
We must also look into the crystal ball. Taxes this much higher will decrease demand and subsequently reduce value. As this occurs, homeowners will be petitioning tax authorities for lower assessments based on comparable sales, thus reducing revenues even further. Then the cycle starts all over again with a need to raise rates to make up for the decreasing total revenus based on a lower overall tax base. It's an ugly prospect that will take years to resolve, if at all.
To conclude, a word about relevance. If I hear one more person tell me we pay so much less in taxes compared to our neighboring states, I may commit a felony. While that may be factual, it is a TERRIBLE argument for our current state for this reason: You cannot raise taxes on a given area/property 60-80-100% or more in such a short time and not destroy their value. Raise any property's taxes by 100% in one year and then tell a prospective purchaser that it's still much lower than what Illinois pays and watch their response. Watch it as they turn and walk away from buying because of the radical change from a few short years ago. This is a mess not soon solved. In every mess there's opportunity....and Hamilton County may just be positioned to take advantage of the brewing storm to the south.