CBER150_B

General Tax Policy Research in Indiana

Relative Regressivity in Indiana’s Sales and Excise Taxes
by Michael J. Hicks, PhD
This document analyzes the regressivity of Indiana’s Sales and Excise Taxes and compares this regressivity in border states. This analysis is performed since every new tax proposal involving property taxes calls for increases in Indiana’s Sales and Use Tax. Thus, potential changes to the regressivity of our states’ taxes are at issue. Download the PDF.

The Influence of Property Tax on Rental Rates
by Michael J. Hicks, PhD
This paper analyzes the incidence of property tax rates on rental property in Indiana. Governor Daniels’ proposed property tax plan calls for a 2 percent cap of total assessed value on rental property taxes. This cap is modestly higher (about 0.18 percent) than the current statewide average paid by all properties. We note that property taxes currently treat rental property differently than other residential property in that it is not typically subject to a homestead exemption. In practice, most rental property owners are likely paying more than the average homeowner due to the absence of the homestead exemption. However, the prospect of a differential treatment of rental property from residential property motivates an analysis of the incidence of this tax. Download the PDF.

Why Keep Indiana’s Property Tax?
This report provides analysis of the economics of local property taxes, in an effort to address the question as to whether Indiana needs a property tax. The goal is to assess the costs and benefits of the property tax system as it is currently structured and under different reforms. Download the PDF.

The Implications of Property Tax Reform on the Political Economy of Local Government
By Cecil E. Bohanon, PhD
This essay analyzes the impact some of the proposed changes could have on local communities’ public spending choices. A number of methods can be used to determine spending for local capital projects. The goal is to compare and contrast the likely outcomes of these different institutional arrangements. Download the PDF.

Property Tax Rates and Tax Increment Financing
by Michael J. Hicks, PhD
Economists have long voiced skepticism regarding the efficacy of many economic development incentives. Empirical research into the effectiveness, revenue replacement and overall cost of the programs provides little evidence of their success. This debate becomes of prime importance as Indiana considers the role incentives may play in altering rates for local property tax payers. To better examine this, we review the Tax Increment Financing program in Indiana, review existing literature on tax incentives and estimate the impact of tax incentives on Indiana’s property tax rates from 1988-2003. Download the PDF.

Kernan-Shepard Commission and Local Government Expenditures
by Michael J. Hicks, PhD and Cecil E. Bohanon, PhD
This study attempts to address the potential impact of the report's implementation on the costs of local government. This is a narrow undertaking, and leaves other important elements of the commission's report for another day. We begin our analysis by estimating both scale economies and efficiency gains from the proposed reforms, and with a discussion of the literature on local government consolidation. Download the PDF.