INDIANAPOLIS – The Senate Republicans put their own tax plan on the table Thursday – a minor reduction in the business personal property tax and an additional corporate tax cut.
If the goal is to create a better business environment to create jobs and build businesses and encourage entrepreneurship in Indiana, we think this is the better approach, said Senate President Pro Tem David Long, R-Fort Wayne.
Gov. Mike Pence has sought an elimination or phase-out of the business personal property tax assessed on equipment and machinery. This tax brings in about $1 billion annually to local schools and governments.
But he has not given a detailed plan – leaving that up to lawmakers. House Republicans want to allow counties the option to exempt new equipment from the tax.
And now the Senate GOP wants to focus more on the corporate tax. Its plan would further reduce Indiana’s corporate income tax rate to 4.9 percent by 2019.
It has already been reduced from 8.5 percent and was set to go to 6.5 percent next year. Senate Bill 1 would drop it to 6.5 percent this year and down to 4.9 percent in the future.
The revenue loss would be about $132 million annually to the state when fully implemented.
But Sen. Brandt Hershman, R-Buck Creek, has found about $25 million in offsets through reduction of various tax credits.
And he said reducing the corporate tax will catapult Indiana into a leadership role with one of the lowest corporate taxes in the nation.
The second part of the plan would exempt small businesses with less than $25,000 of personal property in a county from paying the business personal property tax. That would eliminate filing for seven out of 10 businesses but would cost local governments only $25 million to $30 million.
Some counties might see an administrative savings.
This is really the best solution for right now, said Sen. Luke Kenley, R-Noblesville. This avoids a major shift among taxpayers.
The Senate Republican plan helps both small businesses with property taxes and big businesses with corporate taxes.
Long deflected criticism that Senate Republicans are not giving the governor what he wants.
I think the governor wants to improve the business climate, he said.