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No one wants to pay higher taxes. So a proposal from Indiana’s city and town officials for power to assess more taxes won’t garner a lot of support.
But the proposal should give the state legislature the opportunity to fix two deficient, unfair state laws. It should do so right away.
The first is an egregious law that allows the city councils in Fort Wayne and some other cities power to set countywide tax policy. By definition, the practice is taxation without representation – council members elected by Fort Wayne residents can raise the income taxes paid by residents of New Haven, Leo-Cedarville and all other areas whose citizens have no chance to vote on Fort Wayne City Council races.
The practice is a result of a faulty formula for establishing and raising countywide income taxes. The formula appears to give councils representing different cities, towns and rural areas a say.
But if a city council represents a majority of a county’s population, as Fort Wayne’s does, it controls countywide income tax policy.
If the law is ever challenged by a lawsuit, courts could well determine that the practice violates the state constitution. It gives city residents the privilege of electing the people who set their local income tax policy but denies it to residents outside the city.
The Indiana Association of Cities and Towns is proposing more flexibility in tax policies that would allow a city to raise local income taxes for residents in the city but not beyond. If nothing else, the proposal should offer the legislature the impetus to give the authority for setting countywide incomes taxes to county councils only.
The association is also seeking authority to correct another law that wrongly wrests power that ought to lie in the hands of local officials and gives it to the legislature. Only the General Assembly can establish hotel taxes or food and beverage taxes in individual counties. Such power should lie with local officials.
The association wants city and town councils to have the power to levy such taxes within their communities, and that is clearly who should have that power.
The councils are all composed of community members, and they are in a far better position to weigh the positives and negatives of such taxes than 150 legislators from all parts of the state. More importantly, constituents can far more easily and directly present their opinions about such important issues to local council members than to state lawmakers.
Much of the cities’ and towns’ legislative agenda is driven by the tough limits on property taxes that are crimping local governments.
Decisions about raising taxes vs. cutting services should be made locally, by the council members elected to represent the constituents those policies affect.
