Land Value Taxation in Indiana

In 1998, the Indiana State Supreme Court ruled that the state’s real estate manual violated the state constitution because it was too subjective, lacked meaningful reference to property wealth, and failed to provide uniformity and equity. Though two years have passed since this landmark decision, Indiana policy makers have made minimal progress in the implementation of a more equitable and uniform property tax assessment system. Policy makers have focused almost exclusively on the projected tax burden shifts, especially those to homeowners, under a market-derived assessment system, and have all but ignored the underlying inequities that have plagued Indiana’s assessment system for years. Most notable is the underassessment of land, especially residential land, which has resulted in significant tax burden shifts. This working paper documents problems associated with the state’s land valuation methods and procedures, along with several other issues that must accompany Indiana’s assessment reform efforts.