Incoming Gov. Mike Pence pitched his plan to lower Indiana's individual income tax to a group of business leaders Thursday.
The Republican who will take office Jan. 14 has proposed chopping that rate from 3.4 percent to 3.06 percent. However, that idea got a skeptical reception from GOP state legislative leaders who are preparing to write a new two-year budget.
Pence used his speech at the Indiana Chamber of Commerce's "Indiana Vision 2025" conference to say he still plans to push for the tax cut when lawmakers meet for their four-month session starting in January.
"We can fund our priorities and we can put more money in the pockets of taxpayers and Hoosier businesses in ways that will create jobs, and I ask you to keep an open mind about it," he said.
The governor-elect is pushing a plan that would cost about $525 million per year. On Thursday, he dryly referred to positions staked out by House Speaker Brian Bosma, R-Indianapolis, and Senate President Pro Tem David Long, R-Fort Wayne.
"I've been reading a little more about my plan since the election, and let me say to you from my heart: I respect the opinion of my colleagues, friends all, and I welcome the discussion," he said Thursday afternoon.
Bosma has joked that as speaker, he stopped outgoing Gov. Mitch Daniels from raising taxes – he proposed a 1 percent income tax hike on top earners for one year – in his first year in office, an implication that he might also stop Pence.
He has repeatedly underscored the tax cuts Indiana is already implementing, including a step-down of the state's corporate income tax rate from 8.5 percent o 6.5 percent, and a nine-year phase-out of the state's inheritance tax.
And Bosma has emphasized that more than half of the state's tax revenue already comes from sales taxes, and that he is concerned with throwing that ratio further "out of balance."
A key moment will come this month, when a state fiscal panel releases its forecast of how much money the state will take in over the next two-year budget period.
Lawmakers lean heavily on that fiscal forecast, as well as an updated version that will be released in April, just prior to the year's legislative session wrapping up, to determine how much the state can afford to spend.
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The tax cut Pence is proposing would save a family that earns $50,000 per year about $170. It would cost the state a total of about $525 million in tax revenue, Pence's campaign estimated. Pence said Indiana now has the largest surplus in its history.
"Because of that surplus, we have choices we can make," he said. "Those choices include tax relief for Hoosiers and Hoosier businesses. I've made my priorities clear."
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