Friday, September 7, 2007

ok, now it's time to sue somebody

In this morning's C-J, Lesley Stedman Weidenbener reports on efforts to put together a class action suit on the constitutionality of various provisions of the Indiana property tax. (Andy Horning has written/spoken extensively on this topic, including this op-ed piece in the Indy Star.)

...The lawsuit, among other issues, challenges Daniels' authority to extend a deadline for local governments to impose income taxes to reduce property taxes next year. A law passed by the General Assembly in the spring set the deadline as Aug. 1, but Daniels has twice extended it.

The lawsuit accuses the governor of violating the state constitution by attempting to void a provision of a state law....

Several of the lawsuit's claims are based on a constitutional provision requiring a "uniform and equal rate of property assessment and taxation."

Price argues in the lawsuit that in some counties, residents can be paying dramatically different property-tax bills depending on the taxing units they live in. For example, residents living in different school corporations, fire districts or townships can pay significantly different rates.

The Indiana Constitution, however, means to ensure that all taxpayers bear their "equivalent portion of the tax burden," the lawsuit says.

"The differential tax rates are the result of intentional state discrimination," it says. "While absolute uniformity cannot be expected, differential effects of over 100 percent simply do not comport" with the constitutional requirements.

Also, the plaintiffs challenge the validity of property assessments, based in part on actions by the state and in part on actions by local assessors. In particular, it accuses the Department of Local Government Finance of failing to provide counties with the appropriate and accurate tools, methods and systems for conducting assessments.

The lawsuit also asserts that the constitution prohibits the use of property-tax revenue paid by homeowners for schools. The lawsuit refers to the Common School Fund, which according to the constitution is to be funded by various sources including "taxes on the property of corporations."

"In spite of what is certainly a restrictive constitutional provision … the state of Indiana has levied and collected and continues to levy and collect taxes on residences in the state of Indiana, a practice not authorized in Article 8, Section 2" of the constitution, the lawsuit says.

Property taxes are one of the major sources of revenue for Indiana schools, but that money does not flow through the state's Common School Fund. Instead, it is collected and redistributed locally.


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