IBJNews

Indiana lawmaker: Online tax could replace estate tax

Back to TopCommentsE-mailPrintBookmark and Share

A top Indiana lawmaker is floating the idea of using an online sales tax to help replace revenue that wouldn't be collected if a proposal to eliminate the state's inheritance tax becomes law.

State Sen. Luke Kenley, a Noblesville Republican who chairs Senate Appropriations Committee, wants Congress to require all online retailers to collect state sales taxes. He said it would be an ideal replacement for the inheritance, or estate tax.

"It's almost a one-for-one replacement and it's a perfect replacement for the estate tax," Kenley told the Times of Munster.

Indiana would stop collecting about $165 million a year starting in 2020 if lawmakers eliminate the state's inheritance tax, according to estimates.

Currently only online retailers with a physical location in a state are required to collect sales tax. Individuals are supposed to pay a 7-percent use tax for online purchases where sales tax wasn't collected, but the Indiana Department of Revenue said that few people do.

In November, Kenley told a Congressional committee that pending legislation sponsored by U.S. Sen. Dick Durbin, D-Ill., would ensure equality between online and brick-and-mortar retailers by requiring both to collect sales tax from their customers.

A November study by the Indiana Fiscal Policy Institute and Ball State University estimated that Indiana misses out on about $77 million a year by not collecting sales tax for all online purchases. Other studies put the state's annual loss at nearly $200 million.

Kenley said even though Indiana is on track to have a $1.77 billion budget surplus by June, the state needs to protect itself by replacing the revenue if a proposal to repeal the inheritance tax is enacted.

"The additional revenues that we see right now aren't really guarding us from a second-dip recession," Kenley said.

A coalition of Indiana retailers recently launched a lobbying push aimed at convincing state lawmakers to force online businesses to collect the state's 7-percent sales tax from customers.

The group, which calls itself Indiana Merchants for Tax Fairness, argues that the state's policy puts traditional stores at a disadvantage to online retailers and costs the state millions of dollars in tax revenue each year.

Indiana's current policy dates to a 2007 deal to get Amazon.com to open its first warehouse in Indiana that came with the promise that state lawmakers wouldn't push for an online sales tax. Amazon now has three distribution centers open in central Indiana and announced plans last summer for a fourth.

ADVERTISEMENT

  • Tax is Tax
    Sorry, I am not buying into this proposal. Once a tax is established, it rarely goes away. What is the purpose of any tax? Government needs tax funds in order to operate. So, when a tax decrease or tax elimination is proposed, the first words out of most politician's mouth is - We Need a New Tax.
  • Geez
    The idea that everyone should pay a small 7% tax on internet purchases so that the rich and super rich can more effectively preserve their generational wealth is appalling. The merits of an internet tax should be discussed on their own, but it should never be implemented to protect the rich from existing taxes.
  • response
    I don't disagree - subsidies to raise corn and beans (or not to) in Indiana should also are a joke. Tax loop holes should be and codes need to be simplified to accurately tax person/business on true income. My point is rather that $1M is an arbitrary amount at which to determine you need to pay 71% in tax, particularly when the majority of that is not a liquid asset.
  • Oh, Really???
    It's been my experience after nearly 30 years in the tax professional business that NO family farms ever show a taxable profit. By the time you factor in government subsidies and other tax-free incentives, there is NO income tax due. So, perhaps, it's time to eliminate all of these so-called family farm dynasties that don't pay tax for generation after generation...
    • Problem is
      Taxing inheritance over $1M @ 71% - great idea, that should effectively eliminate any family farms over 200 acres - no one will be able to afford to inherit and stay in business.
      On-line sales tax - by all means. Tax consumption rather than efforts to save. It offers local businesses to not be put at a disadvantage for being located in state. The real issue lies with the implication that if one tax replaces the other, the old will never comes back. ...
      • We need more of your money
        Come on we need more of you po folks money. Good relationship with Durbin (what a joke he is). Hey while we are at it take away that perk for those disabled veterans too like you tried to do last year. those cripples should pay again and again - selfishly getting injured so we have to subsidize them. Are you sure Kenley is a Republican?
      • TYPICAL
        Luke, I expect nothing less that your old,useless ideas. Why not have a regressive tax, than a progressive tax. Again, you and Mitch think alike, the serf's should serve the rich masters. I say tax inheratance over 1 mill at 71%. Only earned income should a low tax rate. I am already on my hands and knees paying for the dome, the luke, market square, concseco, the mall, the simon building, the mall, the jw and all other subsidized companies and buildings. You make me sick, retire and take your feable ideas with you. I sure you will enjoy the perks of perf and lobbying.
      • Call it what it is
        Otherwise known as, "redistributing the tax burden from the wealthy to the middle class." Great idea.

      Post a comment to this story

      COMMENTS POLICY
      We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
       
      You are legally responsible for what you post and your anonymity is not guaranteed.
       
      Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
       
      No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
       
      We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
       

      Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

      Sponsored by
      ADVERTISEMENT

      facebook - twitter on Facebook & Twitter

      Follow on TwitterFollow IBJ on Facebook:
      Follow on TwitterFollow IBJ's Tweets on these topics:
       
      Subscribe to IBJ
      1. The Walgreens did not get a lot of traffic. It was not located on the corner of the intersection, and not really visible from Emerson. Meanwhile the CVS there is huge and right on the corner. I am guessing a lot of people drove by a million times and never knew the Walgreens was there. Although, with the new Walmart market going in, that area could really see a lot of increase in traffic soon.

      2. You folks don't have a clue. There is a legal way to enter this country and to get aid. This left unchecked could run us to ruin quickly. I also heard that 'supporters' were getting major $$ to take them in? Who's monitoring this and guess who pays the bill? I support charitable organizations... but this is NOT the way to do it!

      3. Apparently at some time before alcohol has been served at the fair. The problem is that beer or wine used to be a common drink for people before soft drinks and was not thought to be that unusual. Since many folks now only drink to see how much they can drink or what kind of condition they can end up in it becomes more problematic. Go to Europe and its no big deal just as if you had sodas of milk to drink everyday. Its using common sense that is lacking now days.

      4. To address the epic failure of attracting race fans to both the Indy 500 and Brickyard 400 would take too much of my time to write. Bottom line Boles is clueless and obviously totally out of touch with the real paying fan base. I see nothing but death spin coming for the Brickyard, just like Indy. Get somebody in a place of power that understands what race fans want.

      5. I am a race fan through & through. It doesn't matter if it's Indy cars or Nascar. I love a great race. I go to several other tracks each year and you can see the entire track. I know Indy has tradition, but fans want to see the entire race. I sit in the Penthouse, am almost 60 years old, and would like to see a better TV screen in turn 1 so you can see the entire race. Then I think Indy needs to install an escalator so us old folks can make it up to the Penthouse and down again if we want more options to purchase food and drinks. Just a race fans opinion. Lights won't make the race any better, but you might be able to see the TV better at night. Turn 1's screen needs replaced with a better and bigger screen.

      ADVERTISEMENT