If the Indiana General Assembly is going to pass a business personal property tax cut, it will probably have to go through State Sen. Brandt Hershman, R-Monticello, the chair of the powerful Senate Tax & Fiscal Policy Committee.
In a brief interview this past week, Hershman said he’d prefer the idea be sent to a study committee for further review, saying a solution to the problem of shifting $1.1 billion in business taxes without creating an undue burden on Joe Taxpayer “isn’t readily apparent.”
Anyone watching Gov. Mike Pence’s State of the State address Tuesday may have noticed Pence saying he wanted the Legislature to eliminate the tax without loading it “onto the backs of hardworking people.”
The general attitude at the Statehouse right now, to that statement, is one of incredulity. Remember, Pence hasn’t offered a blueprint for how to pay for the cut, other than to suggest it could be done over time, and that it could be buffered by growth in the economy.
He just finished getting the Legislature to cut the state income tax rate, so we’re assuming that’s off the table. Many legislators would also consider forcing more than $550 million in cuts to schools and local government services to be an undue burden.
The House Republicans came up with a belated plan to allow individual counties to eliminate the tax on new investment only, with caveats that businesses couldn’t qualify simply by moving operations across county lines.
Howard County officials dislike that idea as well, mainly because the business personal property tax accounts for more than 30 percent of all local revenue by some estimates. That means Howard County would be unable to offer the cut, and would be put at a competitive disadvantage.
“Does it create a race to the bottom?” Hershman said of county-by-county elimination. “Competition is a good thing, but if you’re competing on an unlevel playing field, it’s a challenge.”