IBJNews

Lawmakers eye cutting corporate taxes

Back to TopCommentsE-mailPrintBookmark and Share

Legislators are moving ahead with a plan to cut Indiana's corporate income tax rates by about 40 percent while holding off on a proposal for phasing out the state inheritance tax.

Decisions on both taxes are complicated by the state's tight money situation, with the Senate's top budget writer on Tuesday challenging business groups to suggest ways to replace the projected $140 million a year that the corporate tax cut could cost.

Supporters of the corporate tax cut told the Senate tax committee that Indiana's 8.5-percent tax rate is among the nation's highest and that it discourages businesses from moving to Indiana. They argued that cutting the rate to 5 percent would help the state's economy.

Tax committee Chairman Brandt Hershman, R-Lafayette, said work still was being done on a plan for covering the expected loss of tax revenue, but that he expected the panel to vote on it later this week.

Hershman's proposal includes an estimated $59.5 million annual revenue boost by starting to tax the interest on state and local bonds from outside Indiana and $7 million from the elimination of various tax credits.

Those still leave a projected $74 million gap in what is the state government's third-largest revenue source, behind sales and individual income taxes. The corporate income tax is projected to raise about $688 million of the state's $13.4 billion in revenue for the coming budget year.

Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville, told business organizations during Tuesday's hearing that they "need to step up to the plate" with revenue suggestions if they want the tax cut.

"There is a significant dollar disparity here," Kenley said.

Many larger businesses are able to transfer profits to other states and lessen their Indiana taxes, but smaller companies aren't able to do that and end up paying relatively more, said Bill Waltz, a vice president of the Indiana Chamber of Commerce.

He said the tax rate also hurt efforts to attract businesses to the state.

"Companies looking to come into Indiana don't always look past that 8.5-percent rate," Waltz said. "On its face, it is the advertisement of Indiana's rate and it's not always a good thing."

Gov. Mitch Daniels is interested in the corporate tax cut as a way to attract new jobs and investment but wants to ensure it doesn't hurt the state's revenues, Daniels spokeswoman Jane Jankowski said.

The tax committee also heard from supporters of phasing out the inheritance tax over five years.

Bill sponsor Sen. Jim Banks, R-Columbia City, said the state's inheritance tax was a disincentive to keeping wealth in the state as some people move away to avoid having it fall on their estates.

The state now exempts inheritances up to $100,000 to children and grandchildren and has a top rate of 10 percent for portions of estates topping $1.5 million to them. More distant family members and non-relatives face higher rates.

State figures show the inheritance tax raises about $135 million a year.

Hershman, the tax committee chairman, said he supported the concept of eliminating the inheritance tax but declined to call for a vote on the bill because of its cost.

"Most people realize that our budget is already strained about as far as can be reasonably be expected," he said. "Absent a source of replacement revenue, we are going to have to move slowly on this."

ADVERTISEMENT

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. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

ADVERTISEMENT