Property tax caps will be added to the constitution via passage of a referendum in yesterday's elections. The caps will be 1% for residential, 2% for business/agricultural, and 3% for equipment. What does this mean to the agricultural community?
Hypothetical situation for a Gibson County farmer:
Homestead: 1 acre homestead valued at $150,000 = Max. tax of $1,500
Land: 400 acre crop farm, average land value of $4,000/acre = Max. tax of $32,000
Buildings: 1 equipment pole barn, 1 shop, 1 small office, valued at $250,000 = Max. tax of $5,000
Equipment: Consider most fully depreciated, other than a few key items (one tractor, combine w/ new heads, say), valued at $500,000 = Max. tax of $15,000
Total Maximum Property Tax Levied: $53,500
Note that this would cover the basic necessities of work for a farmer, and 400 acres probably would not bring enough income for a farmer to avoid taking off-farm work to supplement income.
The anticipated local revenue loss in certain areas should spur an increase in local taxes to bring households and businesses closer to the capped levels. Lake and St. Joseph county governments are to be the hardest hit, with high value homes receiving substantial rebates from implementation of the caps.
For more information on this topic, please click here or here.