Would the Trump tax plan be good for Hoosiers?
The tax reform framework introduced by President Trump in Indianapolis not only can—but must—be a positive step forward for Hoosiers and all Americans. Failure of Congress and Washington on this critical issue is simply not an option.
I won’t detail here the many job and wage-boosting tax changes that have occurred in Indiana over the past 15 years. Our federal policies are long overdue, however, to complement the progress at the state level. Encouraging business investment and accelerating economic growth are always winning strategies. Additional elements of the administration’s proposal bring more benefits for all Hoosier taxpayers.
Making the corporate tax rate competitive with other nations around the world will drive income growth. Paving the way for foreign-derived profits to be brought back to the United States will lead to company investments in wages and benefits, enhanced training opportunities and more in a time in which talent attraction and retention is the biggest challenge for employers.
Just look at one industry—biopharmaceuticals. More than half of the world’s largest companies are based in the United States (including Eli Lilly and Co. in Indiana) and an even higher percentage of research and development takes place in the U.S. Yet when major deals occur, international companies are the buyers of American operations nearly two-thirds of the time. That is due to the huge tax disadvantage for pharma companies located in Indiana or any of the other 49 states.
More money will find its way to all Hoosiers through a variety of steps in the plan:
Lower tax rates for individuals, small businesses and corporations.
Dramatically simplifying the code to reduce the time and cost of tax preparation.
Eliminating the poorly functioning alternative minimum tax.
Ending perverse incentives to move jobs overseas.
Removing tax loopholes.
Doubling the standard individual deduction.
Increasing the child tax credit.
Taxpayers in high-tax states—think Connecticut, New York, New Jersey and California—will not benefit as much as Hoosiers if state and local deductions come to an end. That’s a reason, once again, to celebrate Indiana’s many past efforts at enhancing its tax climate and have Hoosiers stop subsidizing these high tax-and-spend states.
As with most pieces of legislation, there are unknowns at this point. These include, but are not limited to, income levels for each tax bracket, details of interest deduction limits and the fate of a variety of additional tax breaks. Congress will still leave its imprint on the final plan.
The framework is not initially deficit neutral—a long-stated Indiana Chamber priority. The economic activity generated by the lower tax rates and other reforms, however, is projected to address that concern. It makes economic sense, but is still an uncertain proposition.
Is the plan perfect? No. But what initial proposal is? Does it outline what it takes to improve economic prospects for our state and nation—our workers and residents? Absolutely!•
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Brinegar is president and CEO of the Indiana Chamber of Commerce. Send comments on this column to firstname.lastname@example.org.