Indiana News

Property Tax Reform at Heart of Bowen Legacy

5/6/2013


Otis Bowen (1918-2013) (photo courtesy IUPUI)

Otis Bowen is being remembered as the governor who first clamped a lid on spiraling property-tax bills.

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Bowen had pushed to rein in property taxes as House speaker in the late 1960s, a time when tax bills were rising 10% to 15% a year. Tax reform was the centerpiece of his unsuccessful run for governor in 1968, and his victorious campaign four years later.

His solution, a cap on how much local governments could collect in property taxes, is still in place today.

With adjustments for inflation and to the way the maximum tax levy was calculated, taxes soared again three decades later. But Purdue economist Larry DeBoer says they'd have risen even faster without Bowen's frozen levy.

And he says Governor Mitch Daniels' 2008 property tax caps built on the model Bowen created 35 years earlier. Bowen doubled the state sales tax to 4% to make up the lost revenue to local governments. Daniels added another penny to the sales tax for the same reason. And both governors encouraged the use of local income taxes to reduce governments' reliance on property taxes. DeBoer notes that's an option that didn't exist before Bowen enacted it.

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