By AP in the Indianapolis Star:
Indiana economic experts say state lawmakers’ efforts to
cut taxes will spur the economy but that Gov. Mike Pence’s proposed cut in the
personal income tax isn’t the best place for reductions.
Lawmakers have until April 29 to decide what areas they’d
like to cut. The proposed House budget does not include Pence’s proposal, while
the plan passed by the Senate gives Pence only part of the $500 million cut he
sought.
The final version will be hashed out in conference
committee and largely guided by the revenue forecast that’s to be unveiled
Tuesday.
Pence has pushed for his tax cut, a signature piece of
his campaign, and has circulated a letter from noted economist Larry Lindsey,
who served under three Republican presidents, The Journal Gazette reported .
Lindsey urged support for the income tax cut, saying
trimming the rate puts more cash in the hands of business owners.
Matt Will, associate professor of finance at
the University of Indianapolis, said every dollar cut in taxes tends to
increase economic activity, but that doesn’t mean lawmakers should start
eliminating taxes. Critics of Pence’s proposal say the state needs to be wary
of cutting more until its revenue picture is clearer.
“Democrats need to realize that every dollar you increase
in taxes, you reduce growth in the economy,” Will said. “Republicans need to
realize you have to have taxes in a civilized society.”
The Senate budget proposes eliminating the inheritance
tax, and cutting a tax on banks and financial institutions by roughly $150
million.
House Ways and Means Chairman Tim Brown,
R-Crawfordsville, says the inheritance tax cut will have a greater effect than
Pence’s proposal. He notes that the tax often causes people inheriting family
farms and small businesses to sell them just to get money to pay the taxes.
While the inheritance tax might affect only a few
thousand estates annually, he said three times that many people are
beneficiaries of the estates. Some older residents also move their assets to
states without an inheritance tax.
…
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