Action Alert: Indiana General Assembly Considers Legislation Disproportionally Impacting Indiana’s Low-Income and Vulnerable Residents

On January 17, 2012, IACED Executive Director Andy Fraizer and board member Terry Keusch (Pioneer Development Services) testified against Senate Bill 344 in the Indiana General Assembly. The Indiana Association for Community Economic Development (IACED) is encouraging all members to contact their elected representatives in the Indiana General Assembly and voice opposition to Senate Bill 344. See information below to contact your elected representative.  State Senator Brandt Hershamn is the author of the legislation. This bill repeals or sunsets various aspects of the Indiana Code benefiting families struggling to make ends meet.

 


 

Take Action Now!

Call your State Senator and tell them YOU oppose Senate Bill 344!

Use the following link to find your Senators phone and/or email address: http://district.iga.in.gov/DistrictLookup

If your Senator is any of the following, they are members of the Senate Tax and Fiscal Policy Committee: Hershman, Mishler, Buck, Delph, Head, Holdman, Kenley, Landske, Walker, Skinner, Breaux, Broden, or Randolph. IACED member outreach to them is even more important.

Message:

(Senator) ____________, thank you for speaking with me. I am contacting you to OPPOSE Senate Bill 344. The development of affordable housing is important to providing quality shelter and supporting the Indiana economy.  In Indiana, the LIHTC has provided critical financing for the development of 45,655 affordable apartments through 2009Since 1987, the LIHTC has created 55,699 direct jobs and 13,697 permanent jobs in Indiana Please oppose the legislation’s repeal of the prohibition against using the value of federal income tax credits awarded under Section 42 for the purpose of determining assessed value.  This provision will increase the cost of providing affordable housing in Indiana.

This bill also sunsets the following community development related tax credits after December 31, 2016.

  • Neighborhood Assistance Program credit
  • Individual development account contribution credit
  • Earned income tax credit
  • Enterprise zone employment expense credit
  • Enterprise zone investment credit
  • Enterprise zone loan interest credit
  • Historic rehabilitation credits
  • Residential historic rehabilitation credit
  • Community revitalization enhancement district credit

The sunset of the vital tax credits raises taxes or compromises vital services for Indiana families and communities. I oppose efforts to sunset these credits.


Background

A critical issue for IACED members using the Low Income Housing Tax Credit program (LIHTC), this bill repeals the prohibition against using the value of federal income tax credits awarded under Section 42 of the Internal Revenue Code for purposes of determining the assessed value of low-income housing tax credit property.  As Fraizer and Keusch outlined in the testimony, this provision will increase the property taxes on a significant stock of Indiana’s rental housing portfolio.

There is a clear rationale for the prohibition of the value of the tax credits in calculating property taxes.  The awarded tax credits are converted into equity in the property.  They are not income to the property.  The tax credits are not part of the property.  Indiana does not include any other type of federal or state income tax credits in the assessment of real property.  IACED strongly opposes the repeal of the prohibition against using the value of federal income tax credits awarded under Section 42 for property tax purposes and the other credits mentioned here and addressed by SB 344.

IACED members effectively utilize a number of the tax credits scheduled for sunset in this legislation to support their work. The Earned Income Tax Credit is a direct benefit to many of the low income families served by the IACED member agencies.  Each of these is a valuable tool for local efforts to deliver services and spur reinvestment.  IACED strongly opposes elimination of these credits.  Each is important and IACED opposes their elimination.

The Neighborhood Assistance Program provides up to $2.5 million in tax credits annually to 501(c)3 non-profit corporations. Non-profit organizations use NAP tax credits as an incentive to help them leverage more contributions from individuals and businesses for certain neighborhood-based programs and projects to improve economically disadvantaged areas and households.

In the 2010-2011 program year, 177 non-profits received NAP tax credit allocations.  In the 2009-2010 program year, 165 non-profit organizations received allocations of NAP tax credits.  Approximately 3,500 individual and corporate taxpayers take advantage of purchasing credits in any given year.  From 1989 to present, IACED estimates $39,261,690 of credits have been awarded.  When fully redeemed, these credits will have leveraged a minimum of $78,523,380 in private investments to support Hoosier communities.

According to IACED’s partners at the Indiana Institute for Working Families, the Earned Income Tax Credit (EITC) has proven to be a successful measure in stabilizing the incomes of nearly 500,000 low-income working Hoosiers who have felt the devastating affects of increased poverty and decreased wages as a result of the Great Recession.  Eliminating the EITC would effectively raise taxes on low-income Hoosiers by nearly $86 million in 2012. This represents almost 15% of our population in Indiana.

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One Response to “Action Alert: Indiana General Assembly Considers Legislation Disproportionally Impacting Indiana’s Low-Income and Vulnerable Residents”

  1. [...] similar story is unfolding in Indiana, where the EITC has proven to be a successful measure in stabilizing the incomes of nearly 500,000 low-income working Hoosiers who have…. In Kansas, Governor Sam Brownback claims that fraud is the reason to eliminate the EITC; however [...]