There‘s now a third proposal on the table for reducing Indiana‘s property tax on business equipment.
Instead of phasing out the tax as Governor Pence has proposed, Senate Republicans are calling for exempting businesses with less than 25-thousand dollars in equipment. That would eliminate the tax for 70-percent of Hoosier businesses.
Tax and Fiscal Policy Chairman Brandt Hershman would pair that change with the second cut to the corporate income tax in four years. He says the two-point cut approved in 2011 still leaves Indiana in the middle of the pack. He‘s proposing a further reduction to four-point-nine-percent – second-lowest among states which have a corporate income tax.
Hershman argues the corporate income tax is a bigger obstacle to economic development than the business personal property tax, and would cost less to reduce.
While income tax money flows to the state, property taxes go to local governments. Pence has acknowledged abolishing the tax as he‘s proposed would require finding a way to make up a billion dollars in revenue. Hershman says the 25-thousand-dollar threshold would help most businesses while limiting the cost to local government to 30-million.
House Republicans have proposed making the business personal property tax a local option.