Monday, May 10, 2010

Pretty Pink Slips

Harbeson: I'm not tickled pink

By DEBBIE HARBESON Local Columnist

>>SOUTHERN INDIANA — I received a pink slip in the mail a few weeks ago. I’m not the only one of course. As a matter of fact, thousands of Clark County residents received these pink slips. Are you one of them?

The pink slip I’m referring to is the newest required government form for property owners to complete and turn in to the authorities if they want to continue receiving the homestead deduction.

See, you are only supposed to get this deduction if you belong to the correct special-interest group — people who actually live on the property. If you also own property that is not your primary residence, well, no deduction for you. You must pay the government more.

This form asks for the last few digits of Social Security and driver license numbers to more specifically connect individuals to a given piece of property. A lot of work will go into organizing these pink pieces of paper, matching numbers to property, especially now that property tax caps have gone into effect. They can’t have every property owner taking the deduction on property they paid for and own because, well, the government has to get money somewhere.

They need this money to provide government services, like paying government employees to match up numbers provided on the pink slips so the proper special interest group is reassured into believing that someone else is really paying for the government services.

Placing us into groups is the easiest way to collect money with the fewest complaints because government officials can talk about tax frauds and cheats, which makes us focus on what our neighbor is paying rather than what the government is spending.

The homestead deduction creates three such groups: Those who own property and live there, those who own property but do not live on the property, and finally those who pay rent to live on someone else’s property.

After the groups are created, one of the groups is always set up as deserving to pay more into the system than the others. Or at least they make us think this is what’s happening and in this case, it’s our neighbors who own property in addition to their primary residence.

It’s very important to make us think that the people who are paying more are much richer and can afford to pay more. But is that really the case?

Take this example. Property Owner A is very well-off and lives in a humongous home on an acre of land and enjoys a nice deduction. Property owner B lives on a tiny lot in a modest home and works weekends to fix up another home to rent. B gets no deduction and pays the full tax on the other home. Isn’t B essentially subsidizing the deduction for A?

At this point the politicians like to say that it’s really not about either of those groups, it’s about protecting the renter. So they claim that their law forces the big rich land owner to pay the tax. They’re benevolently looking out for the little guy.

Never mind that the tax the property owner pays must factor into the total cost of owning the property, just like maintenance, insurance and other costs. They want us to think that the tax cost will never move through the economy in a way that would ever affect the renter. He’s protected by their political control and the renter will never see any market effects. Right?

If you believe that then I have some property, I’d like to sell you. No wait, maybe I’ll just rent it to you instead.

Sellersburg resident Debbie Harbeson likes to receive pink slips in the mail. But only if they’re silky and have adjustable straps.

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