INDIANAPOLIS — The Indiana General Assembly has barely begun, but Gov. Mike Pence’s push for a full elimination of the business personal property tax already appears to be on life support.
House Speaker Brian Bosma, R-Indianapolis, is calling for individual counties to be allowed to voluntarily phase out the tax.
Senate Tax & Finance Committee Chair Brandt Hershman, R-Monticello, is calling for elimination of the tax for small businesses only. Hershman’s cut would save businesses about one-sixth what Pence’s plan calls for.
In theory, getting rid of the tax, which detractors say is essentially a tax on all capital investment, could spur economic activity in a state that has been steadily sliding down the rankings for personal income.
Even if neither the House Republicans nor the Senate Republicans support simply getting rid of the tax, which generates just over $1 billion a year for local government, even broaching the idea has caused consternation.
That’s why the Indiana Chamber of Commerce, the biggest proponent of the tax shift apart from Pence, has been unequivocal in saying the tax can’t be eliminated without replacement revenue.
“Absolutely no one has called for that money to be taken away without some type of replacement revenue stream,” said the chamber’s vice president of taxation and public finance, Bill Waltz. “There is no way that all personal property tax can be eliminated overnight. That is not going to be the proposal.”
At a local chamber of commerce meeting in LaGrange County last week, Pence indicated he’s not asking for a sudden cut.
“I want to say to the people in the General Assembly and around the state we should find a way to phase out the business personal property tax. I am open to a broad range of approaches to doing that,” Pence said. “But time and growth will be our friend here. We can do this over time in a growing economy, [in a way] that will be responsible and not unduly burden our local communities or shift the tax burden to individuals.”