A tax cut benefits the payer of that tax.
People relying on the services provided by the tax feel the negative impact of the cut.
In Indiana, the first result routinely trumps the latter whenever a tax cut gets proposed. That priority has given the state its low-tax, business-friendly reputation and fits appropriately in America’s economic system. But who gets top consideration when a proposed tax cut simply shifts the burden for public services from one group of taxpayers to another?
If you guessed “corporations,” don’t punish yourself for thinking cynically. Hoosiers soon may see an example of that perception become a reality.
Gov. Mike Pence and Republican legislative leaders want to eliminate the business personal property tax. It’s a tax on business equipment, everything from office desks and chairs to large manufacturing machinery. The governor and fellow conservatives say the equipment tax scares away businesses that might otherwise locate in Indiana. In Pence’s view, border states have an edge; Michigan may end its business personal property tax, Kentucky’s is lower, and Ohio and Illinois don’t have such a tax.
It’s been awhile since beleaguered Illinois’ tax policies were characterized as an economic threat to Indiana, a state billed as a fiscal oasis.
After rolling out the business equipment tax-cut plan, Pence and House Speaker Brian Bosma, R-Indianapolis, heard an outcry from Hoosier mayors — many from their own Republican Party — as well as school superintendents and library administrators. Why? This reduction, the latest in a long series of tax cuts, would in turn reduce revenue to cities, counties, school districts and libraries by a cumulative $1 billion. All of those entities have already been living leaner from property-tax caps enacted in 2008 and the elimination of the business inventory tax a decade ago.