Local government leaders are anxiously watching the Indiana Legislature as it tinkers with yet another form of taxation this session.
When word first started filtering out that a major source of income to cities and towns, that eliminating the business personal property tax, was high on Gov. Mike Pence’s list, local government leaders became nervous. When they learned the real impact, with towns like Hudson facing a 60 percent loss in revenue, they shuddered.
As of last week, the prospect of local government losing a major piece of revenue has been amended and the hit doesn’t appear to be as devastating as first proposed.
Nonetheless, local leaders are keeping a close eye on what the Legislature will end up doing. As citizens and local leaders have come to know over the years, you never know what our 150 friends and neighbors might end up doing in Indianapolis between the day the session opens and when the final bell rings in its adjournment, in this year’s case, in March.
What local leaders fear — as should citizens, taxpayers — is the negative impact of the business personal property tax reduction. The fear is that what ever tax is allowed to make up the lost revenue will come at the expense of homeowners or wage earners.
One need only look back in Hoosier history some 12 years when the start of the phase out of the inventory tax started. In a few short years, the much-despised inventory tax was gone, as was its revenue to local units of government.
In order for government to make up that revenue, the Legislature gave counties the option of enacting what is commonly referred to as LOIT, which stands for Local Option Income Tax. County councils were given the option of enacting LOIT to pay for such things as public safety. Of course, LOIT is paid by wage earners, not businesses.
The thinking when the inventory tax was repealed was that this would be a boon to attracting new business. And it has, when it comes to certain types of companies. For example, had the tax not been repealed, it might have been more attractive for Family Dollar to build its plant that’s in Ashley in an Ohio community that was in competition for the project. We might not see the Nestles bunny while driving along Interstate 69 near Anderson if the tax was still being levied. The same holds true for a number of distribution facilities, like Amazon, that have set up shop in the Hoosier state in recent years.
Unfortunately, the economic impact of attracting these companies has not brought up the income of Hoosiers enough and universally in order to offset the impact of LOIT.
We need a fair balance of taxes in order to provide services enjoyed by not only residents of Indiana, but people doing business in Indiana. The fruits of economic development are not fairly distributed, yet the burden of making up business taxes that continually get cut is. The Legislature needs to realize that the tax burden has shifted far enough to the wage earner and it must stop.