With a state surplus expected to grow to $5.1 billion by July, Indiana lawmakers are considering whether to cut taxes.
Republicans in the Indiana House of Representatives are clamoring the loudest for tax reductions, rolling out an ambitious plan that would provide a $1 billion cut in taxes by 2025.
While it’s honorable to want to return some hard-earned cash to Hoosiers and Indiana businesses, we urge a cautious approach to tax cuts in this era of inflation and surpluses built in part on pandemic relief provided by the federal government.
Gov. Eric Holcomb and Senate Republicans also are urging caution, and we hope they stick to their guns and carefully examine the House proposal as it makes its way through the legislative process.
The House plan, as proposed by Ways and Means Chairman Tim Brown, R-Crawfordsville, would make cuts to the business personal property tax, individual income tax, utility receipts tax and, to a lesser degree, the sales tax, through reducing the rate, altering exemptions or adding tax credits.
We’re not suggesting that these proposals be dismissed out of hand. We believe they could have a positive impact on the state economy, but their benefits need to be weighed carefully against the state’s other needs and wants and the prospect of draining the state’s reserves too quickly.
Could some of the money be used for a second round of regional READI grants to help boost and grow more communities beyond Indianapolis? Could we use it to improve even more state highways?
In addition to providing tax cuts to business, let’s also consider providing transportation or child care assistance for workers. Or extending high-speed broadband access to more rural communities so they, too, can benefit from the work-from-anywhere boom.
And wouldn’t it be better to spend some of the surplus on one-time expenses rather than trying to fund long-term tax cuts for an uncertain future?
Surely this is some of what the governor has in mind when he says he wants to wait until the 2023-2024 state budget is drafted before deciding how to spend down some of the surplus.
Our hope is that state leaders will take the time to be strategic in determining what can be accomplished to provide the biggest boost to the state while preserving adequate reserves.
Careful analysis might take more time than this year’s “short” legislative session has to offer.•
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