From News-Dispatch Staff Reports
INDIANAPOLIS - State Rep. Scott Pelath, D-Michigan City, introduced legislation to examine the effectiveness of more than 100 different corporate tax breaks in Indiana, then remove those that have been determined to have little or no impact on economic development.
House Bill 1242 also would force business conglomerates in the state to file joint tax records with their smaller subsidiaries.
"At a time when we must make tough choices on property taxes, dozens of special tax breaks for businesses should be called into question," said Pelath. "If a business tax break has not added or saved a job, it ought to end. The dollars could be given back to homeowners instead."
Pelath has identified nearly 120 different breaks for businesses in Indiana code. If enacted, House Bill 1242 would set up a panel to review each break to determine if it created any jobs, led to a more diverse workforce, or had any positive economic impact. The panel would recommend worthwhile tax breaks be maintained, while those judged to have negligible or negative effects would end on July 1, 2009.
"The point is not to say that all business tax incentives are bad," said Pelath. "We can keep the good ones. However, if a business break never created any jobs, and the lost revenue could be used to help others, we ought to let it end."
Pelath's bill would make it harder for business conglomerates to avoid paying their fair share of state taxes. By requiring corporations to file unified tax returns with subsidiaries, it would become more difficult for parent companies and holding corporations to move their Indiana profits between the businesses they own.
"Corporate tax lawyers always can stay a step ahead of the tax system," said Pelath. "One solution to this problem is to have parent companies submit a tax return that includes the earnings of all subsidiaries. If the numbers match, we know everyone is pulling their weight."
Pelath said the issue of corporate taxation cannot be separated from the property tax debate. Every dollar lost to ineffective business tax policy is one that could reduce a homeowner's tax bill.
"While I have no doubt that this bill will terrify some who think that economic development means you can't question corporations. It doesn't, and we need to remember who is most in need of help."
House Bill 1242 is co-authored by State Reps. Craig Fry, D-Mishawaka, and Ryan Dvorak, D-South Bend.
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