The announcement of another expansion by Crothersville manufacturer Aisin Chemical IN is certainly welcome news and helps cement the assessment that the Hoosier economy is on the rebound.
Tax abatements are a tool Jackson County and its four communities can use to help attract new employers and to assist existing ones with expansion.
In last week’s newspaper we published a public notice from the county outlining what Jackson County companies had their property taxes abated during 2013. There were tax abatements totaling $8,432,780 in Crothersville and Vernon Township.
Tax abatements approved were not only for the major manufacturers-ACIN, ADI and Cerro-in the Crothersville industrial park, but also homegrown companies Regal Industries and Pro-Form Plastics.
Tax abatements are easily misunderstood by the public. Tax abatements are not free taxes for 10 years. It is a gradual roll up of property taxes over a decade in return for a company’s pledge to 1) provide more jobs or retain the ones they currently have and 2) increase the assessed wealth of the community where they are situated.
Job creation is important because with salaries comes spending by families which improves the area local economy.
Increased assessed value is important because it allows communities to provide improved services at a lower cost.
Prior to 1996-the year Aisin Drivetrain announced it would locate in Crothersville-the assessed value of the town and township (which is also the school district’s boundaries) hovered right around $15 million. With the growth of ADI and soon Cerro and then ACIN along with Real and Pro Form, the total township assessed wealth is right at $116 million.
That increase in assessed wealth allowed the school to expand, build new, and offer up-to-date technology- all of which helped gain a 4-Star rating by the state.
That increased assessed wealth has allowed the township to purchase three new fire trucks over the past 10 years which improved local fire protection and have helped to lower the fire rating insurance companies use to calculate homeowner’s insurance premiums.
Consider tax abatements like the incentives automobile dealers use to enticed you to purchase their vehicles: rebates, $100 over invoice pricing, 100,000 mile warranties. Or the more recent “Door Buster Black Friday” deals retailers offered you to get up early, go to their store, and spend money.
But perhaps you lament (some may grouse) that, unlike the industries, you don’t get a tax abatement. Not true. If you are a homeowner with a homestead exemption, you enjoy up to a $45,000 reduction off your tax assessment on your home each year for as long as you own and reside in that home. Over a 10 year period that adds up to a $450,000 reduction in your assessed value. Stay in your home for the length of a 30 year mortgage and you get a $1,350,000 residential tax abatement.