When the Legislature’s Blue Ribbon Commission begins its look at the state’s taxes this summer, there will be talk of business needing to pay its “fair share.” But what is fair?
Hoosier companies currently pay 50% of the state’s total property tax.
Should business pay $2.80 for every $1 that a homeowner pays toward police, fire and schools? Currently, that is the number. Should Hoosier homeowners pay so little that only one state in the country is lower?
Should business property owners pay so much that only seven states are higher? Both of those are happening.
Why this disparity? Homeowner deductions. Take a $100,000 home: deduct $45,000 (standard deduction) and you get $55,000; 35% of $55,000 (supplemental deduction) is about $19,000, subtract that and the homeowner is now taxed on just $36,000 instead of $100,000. At a tax rate of 2% (close to the average), the homeowner pays $720 in property tax. Meanwhile, the business owner with a $100,000 property (and no similar deductions at the 2% tax rate) will have a $2,000 tax bill - nearly three times higher.
And let’s remember: property taxes are not the only place businesses are hit with taxes.
