By Bill Waltz, Indiana Chamber of Commerce, in the Indianapolis Business Journal:
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Indiana businesses are required to pay property tax on just about everything they own. This includes all the things they need to conduct daily operations and produce their product. Each year, they must file a return listing all their depreciable assets. Property tax is then assessed on the value of those assets.
This means they pay tax on every machine, device, tool or piece of equipment they own—computers, office furniture, forklifts, laboratory equipment, lathes, boilers, cash registers, robotic assemblers, you name it. It is all taxed—every year.
But taxing personal property is taxing business investment. The state is taxing everything needed to start, maintain and grow a business. The consequence is that businesses moderate capital investments because of the tax implications.
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Local officials are reluctant to give up what is, in some cases, a substantial percentage of their tax base without replacement revenue. It would take $1 billion to replace the personal property tax collected statewide each year. Thus, you can’t simply do away with the tax. Yet, the economic development certainty is that Indiana needs to change its policy.
Current law allows local units to completely abate personal property for up to 10 years. A greater use of this tool would help, but the abatement process is legally complicated, lengthy and cumbersome.
Authorizing local units to permanently exempt newly installed personal property would be more effective. A local option to allow such an exemption would be a logical first step to help attract investment. By exempting only new property, the existing tax base is not affected. As older equipment is gradually replaced, local revenue and dependence on the tax will be reduced. As the personal property tax slowly diminishes, the community enjoys the economic benefits of business expansion.
Enhanced business investment means new jobs, and more real property, income and sales tax revenue.
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See the full article here:
http://www.ibj.com/article?articleId=35634
