CROWN POINT | Lake County has avoided passing a local income tax over questions about its fairness.
The Lake County Council skirted those issues in the past by cutting public spending levels by tens of millions of dollars. However, the budget-makers still came up $15 million short for 2013 because of declining property tax revenues.
Lake County is the only county in Indiana without a local income tax, and no one is yet publicly advocating its passage, but it remains an option for an uncertain financial future.
Imposing an income tax in the county five years ago floundered over objections the estimated $80 million tax would be imposed on employees instead of employers and its benefits would be unequal.
Another concern is whether income taxes collected to lower the county's overall property tax burden would be fairly distributed among the county's 19 towns and cities.
Larry Blanchard, a former county councilman who voted against the tax in 2007, complains the law at that time resembled an experiment in redistribution of wealth, since some municipalities would have received more, or less, property tax relief than their residents paid in income tax.
This year, council members bought themselves a reprieve by voting to borrow enough money to replace the shortfall for next year. But they expect another deficit in 2014.
Rick Niemeyer, who left the council last week to join the General Assembly as a state representative, said he will be thinking about the income tax dilemma in the coming months.
"I want a broad tax where everybody has to pay in. The current model exempts businesses out of the income tax. I think the better formula is if everybody is in, instead of just homeowners and wage-earners paying the tax. Then the businesses would get the advantage of it, too, and drop the reliance on property tax," Niemeyer said.
Blanchard said ideally, an individual should get a dollar of property tax relief for every dollar of income tax paid for that relief.
"Instead, you have winners and losers when it boils down to the individual taxpayer. That is tough to fix," Blanchard said.
Highland Clerk Treasurer Michael Griffin, who worked with legislators several years ago on the distribution issues, said last week, "The law has been corrected for the most part. It does permit the enabling body, in this case is the county council, to make a distribution based on population or letting the money go back where it was raised or some combination of the two."
Griffin said the distribution formula needs some minor changes.
"If the County Council has a change of heart and decides to enact it, there would be time enough for the Legislature to correct that," Griffin said.