Clinton County Income Tax Council
Posted in the Frankfort Forum
#1 Jul 29, 2013
From the Indiana Economic Review; 7-29-13
Who is on our Council?
Add one more layer of complexity to Indiana’s local tax structure.
You didn’t know it until now, but your county has a county income tax council.
That’s because it never met before, and until now in most counties — including the four in northeast Indiana — it didn’t have anything to do.
A new law that took effect July 1 says a county income tax council can pass a wheel tax for a county. Until now, that power belonged to a county council.
A bill making that change failed in the state Legislature when it came to a vote on its own merits this year. But like a zombie, it came back to life and passed — relatively unnoticed — as part of the overall state budget bill.
Why would something like that happen?
Because a wheel tax can be a touchy subject. When they voted on the idea by itself, legislators objected that it would allow a city council to slap a wheel tax on people they don’t even govern.
Which leads to the topic of how a county income tax council works.
The body consists of the county council and all the city and town councils in a given county.
The council has 100 “votes.” Each city or town gets a share of the 100 based on its percentage of the county’s total population. The county council gets its portion based on the people who live outside cities and towns.
The income tax council never gets together in a big room for a meeting. The individual county, city and town councils meet separately to cast their shares of the total vote.
Each unit’s vote is all or nothing. If a town has 10 votes, and its council votes 2-1 in favor of a wheel tax, all 10 votes count as “yes.”
Why was this system devised? Because in some places, city governments have wanted a wheel tax to pay for streets and roads, but county councils have refused to pass the tax.
In some urban areas, the new law puts the city council of the largest city in complete control of a wheel tax. If a city has at least 51 percent of the population, and its city council votes for a wheel tax — game over.
Everyone in that county would pay the wheel tax, even though some of them don’t have any say in who sits on the big city council that controls the outcome.
That can’t happen in any of northeast Indiana’s four counties. The most powerful city council would be Auburn’s, which would control about one-third of DeKalb County’s votes. It still would need help from other cities and towns to overrule the county council.
If a city or town council — or even the county council — wanted a wheel tax, if would start the process by passing a resolution in favor. At that point, every other council in the county would have to consider it for a vote.
A wheel tax technically is a tax on large vehicles between $5 and $40, with the amount based on local choice. It must go hand-in-hand with a “motor vehicle excise surtax” on cars, light trucks and motorcycles, usually between $7.50 and $25 per vehicle.
Money from the vehicle taxes can be spent only on streets and roads.
Wheel taxes tend to be unpopular with voters, but so are potholes. As other sources of road funds keep shrinking, the pressure to pass wheel taxes will keep growing. When it reaches the tipping point, the decision will come from Indiana’s new rules of the road for local politics.
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