NewsPublic Affairs / March 5, 2014

Business Tax Debate Headed To Conference Committee

Lesley Weidenbener - The StatehouseFile.com
Business Tax Debate Headed To Conference Committee

House and Senate fiscal leaders will take a debate over tax cuts for businesses into the last weeks of the legislative session.

The chambers have passed differing versions of bills that would cut the corporate income tax and the property tax on business equipment. The legislation is headed to a conference committee, where members of the House and Senate will meet to find a compromise.

Senate Tax Chairman Brandt Hershman, the author of Senate Bill 1, said the legislation will be another step toward creating jobs and reducing unemployment in Indiana. He said the tax cuts offer “a fiscally responsible way to continue that trend, without unduly burdening local government units.”

The House approved SB 1 on Monday with a 63-36 vote. It would give Indiana counties the option of exempting new property from the business personal property tax, beginning in 2015. That would include exempting property that a business moved to Indiana from another state.

Local governments that don’t take that option could instead offer 25-year abatements to select companies, which would free them from paying the tax.

In addition, the bill would phase in a reduction of the corporate income tax, dropping it from 7.5 percent to 4.9 percent by 2023.

On Tuesday, the Senate passed House Bill 1001, another version of the tax cut legislation. The bill would exempt most small businesses from paying the personal property tax and lets counties offer 20-year abatements to select companies.

It also reduces the corporate income tax rate.

The Senate approved the bill 33-15.

Opponents complained the bills will strip tax revenue away from local governments that are already struggling financially. “These entities cannot lose another dollar,” said Sen. Tim Skinner, D-Terre Haute.

Sen. Jim Buck, R-Kokomo, said he supports the concept of cutting business taxes as a way to make Indiana competitive. But he said the state should reimburse local governments for the money they’ll lose to the property tax cuts.

“Not one of us would appreciate the federal government mandating that we lower one of our taxes without them compensating us,” he said.

And Sen. Greg Taylor, a tax attorney and Indianapolis Democrat, said the Senate’s plan to exempt small businesses from paying the personal property tax will encourage larger companies to cheat. He said those firms will use affiliates to buy equipment, keeping each one below the threshold for taxes.

He complained the proposals will shift taxes away from businesses and onto homeowners.

“If you want a shift of taxes from the businesses to our voters, then go ahead and vote for this bill,” Taylor said. “But if you want to do the right thing, let’s come up with some fiscally neutral ways of attracting businesses that are far more beneficial to communities as a whole than what we’re doing here.”

But Hershman said Tuesday that cutting business taxes will “unleash the power of the private sector” to create jobs and will put Indiana on the “short list of places to invest.”

“This is a good bill,” he said. “You should be proud of it.”

Lesley Weidenbener is the executive editor of TheStatehouseFile.com, a news website powered by Franklin College journalism students.

 

 

Related News

IU Professors To Study Ways To Protect Privacy From Cameras
Indiana Unemployment Rate Holds At 5.7 Percent
Indiana Creates County Travel Status Mobile App