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End punitive business personal property tax

January 4, 2014
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IBJ Letters To The Editor

Gov. Pence is right when he says “The time has come to phase out the business personal property tax” to “spur new investment and growth.”

A good step toward fulfilling the governor’s goal is to exempt production machinery and equipment from the personal property tax. Indiana’s economy is the most manufacturing-dependent in the nation, yet our state penalizes investments in production machinery and equipment by taxing those investments. It’s the old adage, if you want less of something, tax it.

Hoosier manufacturing is experiencing a revival, and it is critically important we keep the momentum. Indiana has added 60,000 manufacturing jobs since July 2009, second-highest in the U.S. behind Michigan, a state that is phasing out its personal property tax.

Much of the recent growth in manufacturing can be attributed to our state’s favorable tax and regulatory climate. Yet, despite the advantageous business environment in Indiana, property tax policy remains an important issue for manufacturers.

The 2013 Indiana Manufacturing Survey conducted by Katz Sapper & Miller and Indiana University Kelley School of Business ranked property and corporate tax policy as the issues “most critical in terms of the cost and viability of manufacturing in Indiana.”

This continued interest in property tax policy among Hoosier manufacturers is well-founded. The non-partisan Legislative Services Agency found that while net taxes across all property types decreased 10.3 percent from 2007 to 2011, business real and personal property taxes increased 6.3 percent.

In Indiana, the share of property taxes collected from residential property is only 29 percent and a whopping 71 percent from commercial and industrial property—an astonishingly lopsided property tax burden on Hoosier businesses.

In 2013, industrial and agricultural taxpayers paid $486.7 million in personal property taxes, which represents 7.76 percent of all real and personal property taxes paid to local governments. Any budget shortfall that may result from exempting production machinery and equipment can be recouped through local government efficiencies and consolidations, and if necessary, the current local option income tax system.

If we want to spur business investment, help farmers, improve the economic competitiveness of our communities, and attract new manufacturers without significantly impairing the budgets of local governments, support Pence’s plan and start with exempting production machinery and equipment from the personal property tax.

Pat Kiely, president
Indiana Manufacturers Association
 

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

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