Republicans hold such a strong majority in state government, they basically can do what they want in the 2014 session of the state legislature.
But they’re having a hard time deciding what to do about adding a major tax break for business in Indiana.
Last week. Republicans in the Indiana House of Representatives said eliminating or reducing the business personal property tax would be one of their top priorities this winter. Businesses pay the tax on machinery, computers, furniture and other equipment.
Indiana House Speaker Brian Bosma (R-Indianapolis) called on House members to create a fair business tax policy to match other Midwestern states.
Putting pressure on us, Michigan, Ohio and Illinois already have eliminated their personal property taxes. Indiana Chamber of Commerce president Kevin Brinegar has said that leaves Indiana at competitive disadvantage for luring new business to the state.
Without getting specific, Gov. Mike Pence said last week he supports “more pro-growth tax relief, particularly focused on encouraging investment in industry in Indiana.”
Wait just a minute, said Indiana Senate President David Long, R-Fort Wayne.
Long pointed out that the personal property tax brings in $1 billion per year for local government and schools. He wanted to know how Indiana is going to replace that money.
“We should not be afraid to look at this, but … if we don’t do it right, it could have a negative impact, a serious negative impact on the revenues for local governments,” Long said.
The Association of Indiana Counties has come out against eliminating the tax, saying it would force local governments to cut services. The association warned that the burden of replacing the business personal property tax could fall on homeowners.
Indiana Republican leaders are proud of their steps to reduce property taxes on homeowners in recent years. Those tax cuts forced local governments to learn how to operate on less money. Local leaders might be able to make even more cutbacks, but eventually they could reach their limit.
Tax cuts sound good until they cause a tax increase on someone else, threaten public safety or reduce our quality of life.
As they try to keep Indiana taxes competitive for business, Indiana legislators should be careful not to put other taxpayers or good local government at risk.
We don’t want Indiana to become a state where everyone wants to do business, but nobody wants to live here.