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Indiana senator set to propose lower corporate tax

January 17, 2011
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An Indiana senator wants to lower the state's corporate income tax from 8.5 percent to 5 percent.

Republican Sen. Brandt Hershman of Lafayette, who chairs the Senate Tax Committee, says Indiana already has a relatively low cost of doing business, but that the corporate income tax is seen as a hindrance to job creation because it is one of the highest in the Midwest. He says lowering the corporate income tax would make the state a more attractive place for companies.

Hershman told IBJ in December that he planned to file a bill to lower the corporate tax rate, but at the time was still uncertain about how much of a cut to propose.

The nonpartisan Legislative Services Agency is working to determine how much the state might lose if it lowered the tax rate. Hershman says there will be an up-front cost to the state but believes other parts of the legislation can help offset that price tag without raising taxes elsewhere.

Indiana only weighs a single factor—a company’s sales—in the formula that determines the income taxes the company pays. But the state’s 8.5-percent rate exceeds that of neighbors such as Illinois, Ohio, Kentucky, Michigan and Wisconsin.

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