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Senate bill seeks to cut corporate income and property taxes

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Republicans in the Senate say they want to spur economic development by cutting two taxes on businesses—one that applies to corporate income and the other to equipment.

Under Senate Bill 1, small businesses that own less than $25,000 worth of business equipment would be exempt from paying what’s called personal property taxes. Additionally, the law would reduce the corporate income tax rate from the current 7.5 percent to 4.9 percent by July 1, 2019.

Already, the tax is scheduled to drop to 6.5 percent in about 18 months.

Cutting the corporate income tax rate would put $132 million back into the private sector, Republicans said.

Senate Tax Chairman Brandt Hershman and Senate Appropriations Chairman Luke Kenley said they authored the bill “to boost Hoosier job and economic growth.”

The announcement comes one day after House Republicans released a plan that would give counties more authority to eliminate the personal property tax locally. That plan would leave it up to the counties to decide whether or not businesses have to pay taxes on new equipment they purchase.

Gov. Mike Pence has proposed phasing out the personal property tax as a way to attract more business owners to Indiana. But Pence says he’ll leave it up to lawmakers to decide how to make up the revenue to local government and schools.

Long said the goal of the Senate plan is to “create a better environment to create jobs and to build businesses. ... We think this bill is the better approach.”

Hershman, who is the primary author of the bill, said an estimated 71 percent of Indiana small businesses would no longer have to pay business personal property taxes if the law were enacted. Indiana ranks among the best tax climates in the nation—except for its the corporate income tax, Hershman said.

“This effort will catapult Indiana into a leadership role nationally with respect to our tax rate,” Hershman said.

John Ketzenberger, president of the Indiana Fiscal Policy Institute, said that because the Senate’s property tax plan would require larger companies to keep paying, it would cost local governments less than the House proposal.

Ketzenberger said he thinks the Senate created a “clever attempt to give the governor what he wants” while also satisfying businesses.

Senate Minority Leader Tim Lanane, D-Anderson, said while he thinks the GOP plan would cost less than the governor’s initial idea, the state should look at giving tax cuts to individuals rather than businesses.

“Does everything have to be just for business?” Lanane said.

Ketzenberger said he thinks Lanane’s argument is worth considering.

SB 1 would also create a commission to examine the effect the personal property tax has on Indiana’s economic competitiveness. The commission would consist of representatives from the Indiana Manufacturers Association, chambers of commerce, cities, counties and the governor’s office.

If the bill becomes law, Long said Indiana would have the second best corporate income tax rate in the country.

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  • Brandt: Please Provide Data
    Brandt - You make a lot of assertions about how great Indiana is doing but you provide no facts no facts. Increasing school funding after first cutting it is like advertising 75% off sale after raising the fair price 200%. Your position is more ideological than factual. You might be right on some of your points but you offer no facts.
  • Corp tax
    1. Indiana's corporate tax rate remains higher than Michigan or Kentucky's and only 24th best in the nation. 2. The Republican vision is to grow the economy through new investment from existing employers and bringing in new businesses from other states. Our prior tax reforms led to the 10th best job growth in the nation last year and the 2nd best in the nation in November. 3. We increased funding for schools in the last budget by hundreds of millions of dollars., we did not cut it. 4. Our prior reductions in corporate tax rates have resulted in solid revenue growth in corporate tax revenue due to business investment. If you want less of something, tax it a great deal. If you want more of something tax it lightly. Our demonstrated results proves it works. 5. A significant portion of the revenue loss is made up by reducing other business tax breaks. The rest is likely to be made up through economic growth.
  • Yet another reason
    to LEAVE Indiana. We are loosing our incomes and freedom as individuals to appease corporations. There are many, many states that do a better job of balancing the needs of it's citizens with the needs of business.
  • Taxes
    Indiana is already tax advantaged vs. Illinois and many other states. Somebody should tell these guys about the law of diminishing marginal returns. Indiana needs to attach problems at its weak points, not work further on areas where it is strong.
    • How Can the State Afford More Tax Cuts?
      SB1 sets up a commission that would consist of representatives from the Indiana Manufacturers Association, chambers of commerce, cities, counties and the governor’s office. Do any of these entities represent the individual tax payer? The basic question is "how low is low enough?" Isn't there some point where taxes become so low that the state cannot provide an adequate infrastructure including schools and roads not to mention quality of life programs such as parks, health care for the uninsured, after school programs, etc. I think the only vision the Republican controlled state leaders have is "cut taxes." Other states that are doing better than Indiana are accomplishing goals without constantly cutting taxes and reducing funding for schools etc. Doesn't this state already have a revenue shortfall?
    • I missed it!
      I thought we had a State Revenue Problem. If we continue to reduce taxes with a goal to bring more companies to Indiana, why not announce that all Corporate Taxes are now "Zero" and wait for the jobs floodgates to break. Maybe companies are looking for more than just lower taxes along with state and local give aways.
    • Illinois will be toast if this passes
      Goodbye Illinois and Chicago. Was nice knowing you :) Please pass this kind of tax cut to seal the coffin shut on Illinois and Chicago. Bring those jobs over!
    • Then who pays
      With loss in revenue who is going to make up the difference? I guess are so called leaders will come up with another tax on the people of Indiana.

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    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..............

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