Property taxes. I know, I know. Boring! But they've been much in the news lately, the result of steep rises for some. And that newsplay has opened a door. A door to talk about this little thing we call society.
In short, to talk about Civitas.
"I like to pay taxes," said Oliver Wendell Holmes. "With them I buy civilization." A tax is nothing more than a bill for services, not unlike your electric bill, not unlike your water bill. It's your bill for having a little thing called civilization.
Electric bills are based on how much electricity you use, as indicated by the meter. That's easy. But how to equitably charge you for how much civilization you use? On what to base your tax bill?
Traditionally, the determination of how much "civilization" to bill a person for has been based on that person's wealth.
Adam Smith, the father of liberal capitalism, wrote, "The subjects of every state ought to contribute toward the support of the government ... in proportion to the revenue which they respectively enjoy under the protection of the state."
In other words: the wealthy should pay the largest share of civilization's cost, because the wealthy have the most under civilization's protection, and the most to lose if that protection fails.
Now determining who is wealthy, and who is not, has always been the rub. The ancient Egyptians imposed a tax on cooking oil. Caesar Augustus imposed a tax on inheritance.
And finally, a tax on property. A Danegeld came, imposed in ancient Saxony, a tax on land and property. And it is this ancient tax that today survives here in Monroe County as the primary funding source for our local county and municipal governments.
The primary funding source for our local civilization.
You ain't hiding this in a numbered Swiss account
And why not? After all, there's a lot to be said about a tax on property. It's an easy and transparent measure of wealth - you can't squirrel away your home, or business, in a Cayman Islands tax shelter. It's not easily hidden from appraisal.
And it's entirely appropriate to tax property to fund local government. Why? Because local government exists to protect property. Fire. sheriff and justice. Title recordings. Zoning. Surveying. Boundary disputes. Infrastructure. That's 90 percent of what local government does.
And if 90 percent of what local government does is protect private property, then shouldn't private property pay for that protection through a tax on it?
Ahh, maybe not
Waay back in 1973, then-Indiana Gov. Otis "Doc" Bowen did something very foolish. Arguing that taxophobic Hoosiers were incapable of electing local representatives who would responsibly set local property tax rates, he instituted something called the "frozen levy."
Under the frozen levy, all property taxes in all of Indiana's counties were frozen at their 1973 levels.
Local governments could not increase property taxes beyond what they had been in 1973, except for small annual increments that effectively amounted to adjustments for inflation.
And that's the way it is still today, 34 years later.
It was a foolish decision. First, it penalized those counties, like liberal Monroe County, who had been running lean and trim budgets. Their budgets were now forever frozen lean and mean.
Second, it rewarded those counties, like conservative Bartholomew, who had been running with a fat property tax. As a result, today, even though it has fewer people, Bartholomew's county government has a much larger (like almost twice as large) budget than does Monroe's.
Third, it made it necessary for local governments to find alternate ways to pay for protecting private property. Ways other than a tax on that property.
The first alternative came in the form of a county income tax - that is to say a tax not on the value of your property but on any money you, and your neighbors, made. This was sold to the public on the basis that, by taxing income, some "relief" could be had on the taxation of property.
But, like other Orwellian terms (think "healthy forests" initiative), "property tax relief" was simply a code for shifting the burden of paying for property protection from those who owned property, to those who did not.
The second alternative came in the form of a state sales tax increment, a portion of which was earmarked, again, for "property tax relief."
In other words, every time someone bought something at a store, a portion of the sales tax collected, like the county income tax, would go to help offset property taxes paid by property owners.
Which was a good deal for us property owners. And a pretty crappy one for the kid down the street, working minimum wage just so he could buy gas for his car.
But, unlike property owners, the kid wasn't likely to vote. Taxation without representation has its upside.
And that's where we find ourselves today. Because of the State Legislature's decision to exempt corporations from paying their fair share of property taxes, residential property owners are in revolt - as they've seen their rates rise 10, 20, 30, or more percent.
But I'll caution them that they doth not protest too much. Indiana has one of the lowest property tax rates in the country (and correspondingly low levels of civilization) and, as I've shown, a large part of that low level is being picked up not by property owners, but by everyone else.
I'd complain about my electric bill, too. That is, unless other people were paying a large portion of it. In which case, I'd keep my mouth shut.
Gregory Travis can be reached at .