CROWN POINT, Ind. — Lake County, long Indiana's lone holdout for passing a local income tax, will begin collecting 1.5 percent of residents' wages this month as part of an effort to shore up the county's coffers.
The local income tax has been an option for Indiana's 92 counties since 1973. It was billed as a way to wean local governments from property tax revenue.
While other counties implemented the tax, Lake County officials opposed it, arguing for years that it was unfair because it didn't tax business income but provided businesses with millions in property tax relief.
But a loss of revenue to statewide property tax caps and other steps cost the county more than $120 million and prompted the county council to pass the local income tax in May.
The tax is expected to bring in more than $45 million for 2014, The Times reported. That amount will grow in 2015 when the first full year of income tax collections is completed.
The tax includes a 1 percent county adjusted gross income tax; a 0.25 percent public safety income tax; and a 0.25 percent county economic development income tax. The public safety tax will help pay salaries and benefits for police, firefighters and other emergency responders and will help cover jail expenses and an E-911 communications system.
The economic development tax can be spent "for any lawful purpose" under state law.
The new tax applies to all county residents, as well as out-of-state residents who work in Lake County. Workers from out of state will pay a smaller nonresident rate.