May be forced to raise Income Taxes

Local Governments Worry about Property Tax Changes

By Peter Neumann

June 18, 2010 Updated Oct 25, 2007 at 3:46 PM EDT

INDIANAPOLIS (AP) - Local government officials say Governor
Daniels' proposal to cap homeowners' property tax assessment could
force counties to raise income taxes.

Indiana counties are allowed to raise local income taxes up to
an additional 1 percentage point if the money is used to replace
property tax revenue. Only 11 of Indiana's 92 counties have
increased the income tax so far.

Daniels says his plan will cut the average homeowners' property
tax bill by more than a third, in part by capping residential
property taxes at 1 percent of a home's assessed value. Commercial
properties would have higher caps.

Indiana Association of Cities and Towns executive director
Matthew Greller says counties may have to increase the income tax
to make up the difference.

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