Republican Mike Pence is looking at ways to cut Indiana income tax rates across the board if he is elected governor next year.

The congressman told The Associated Press on Wednesday that he wants the state's individual and corporate tax rates reduced to 3 percent. The state's individual tax rate is now 3.4 percent and the corporate rate is 8.5 percent. He also said he would like to repeal Indiana's estate tax.

All told, the cuts would likely carry a $1 billion price tag for the state.

But the state's surplus would need to grow more before tax cuts would become viable, Pence said. He didn't give a specific level the state would have to reach first.

"We can be not only the economic engine of the Midwest, we can be the fastest-growing economy in America," Pence said. "It's going to take bold policy reforms, those are some of the things that we're thinking about."

Tax cuts of that magnitude would cost the state about $1 billion, based on last year's tax collections, said John Ketzenberger, president of the Indiana Fiscal Policy Institute. Pence would likely have trouble finding support in Indiana's General Assembly, which has approved a series of very tight spending plans recently, Ketzenberger said.

"Over time we'll see whether tax cuts are possible," said Rep. Jeff Espich, R-Uniondale, chairman of the House Ways and Means Committee. Although, tax cuts are always preferable to tax increases, he said.

Gov. Mitch Daniels socked away $1.2 billion in state reserves last year through a combination of deep budget cuts and an improved economy that drove up income tax collections. He also pushed a through new automatic tax refund, which would return any surplus money held by the state above 10 percent of annual spending to taxpayers.

It's unclear how any tax cuts predicated on similar levels of reserves would interact with Daniels' automatic tax refunds.

Indiana Democratic Party Chairman Dan Parker mocked Pence's ideas Wednesday.

"Today, (Pence) decided to haphazardly throw out his first proposal of the campaign, and it's exactly the kind of thing a Washington insider would propose: cutting taxes with no way to pay for it," Parker said in a statement.

Pence is being challenged by Fishers businessman Jim Wallace for the Republican nomination. Democratic candidate John Gregg filed papers to run for governor Tuesday.

Gregg said Tuesday that he would focus on reinvigorating the state's manufacturing economy if elected governor, in part by luring wind-turbine manufacturers to the state with tax credits and speeding approval of state permits.

Wallace has said he wants to spend $500 million more on transportation projects, cut $6 billion from the budget and grant more taxing authority to localities.

Indiana's fiscal picture, like most other states, has begun improving as the nation has staggered out of the Great Recession. The state said Wednesday it collected $23 million more than expected in taxes last month.