A new report released Thursday questioned whether cutting the business personal property tax would draw businesses to relocate from out-of-state.
But Gov. Mike Pence is still pushing his primary legislative agenda item – setting Indiana on a path to eliminate that tax without “unduly burdening” local government or shifting costs to other taxpayers.
He refuses to discuss any details on how to make it happen, though, saying he is working with legislators and doesn’t want to negotiate in public.
“This is all really about growth for me,” Pence said. “It’s about creating the conditions where our communities will have the ability to attract more investment and more jobs, and as their local economy grows to even have more resources to invest in those services.”
Businesses in Indiana pay property tax on equipment and machinery. It goes to local schools, libraries and governments – about $1 billion annually.
The Indiana Fiscal Policy Institute put out a 36-page report on the business personal property tax Thursday, including the history of chipping away at similar taxes by legislators in the past.
One of the study’s key findings is that taxes on business personal property have a small effect on business relocation from outside a state but could have a larger effect on relocation decisions within a state, such as county-to-county competition.
Lawmakers have not been interested in a wide-scale elimination of the tax. The House has considered an option for counties to exempt only new personal property, and the Senate has considered a corporate tax cut and small exemption for personal property taxpayers.
The Fiscal Policy Institute study also said the implementation of tax caps several years ago is complicating the process of any business personal property tax change. Some taxpayers would pay more through a shift under elimination but many in more urban counties are already at the caps, so government would simply get less revenue to provide services.
“Additional economic growth that might be directly related to the elimination of the personal property tax would take a number of years to be realized, but the losses to local governments would occur immediately,” the report said.
Pence hyped the report as being helpful to the debate but admitted he hadn’t read it.
Reporters repeatedly asked him Thursday to talk about whether he supports replacement revenue for local governments and he wouldn’t bite. The only thing he alluded to was that he wasn’t interested in any state dollars going to credit local units for the loss.
He was also asked to say what it meant to “unduly harm” schools and governments – a phrase he has used for months. All Pence would say was that both bills can be improved through a broad range of options.
“I know you all want me to talk about details, but we are involved in negotiations,” Pence said.