From the Fort Wayne News-Sentinel:
The news stories are saying that Gov. Mike Pence, who originally called in strong terms for elimination of the state’s business property tax that is levied on business equipment, is now backing House Republicans’ “watered-down” version of the proposal. That makes him sound like a political weakling who must give in and accept something second-best instead of holding out for what he really wants.
But heavens, even the fact that he could elicit a counter-proposal and get a debate started in today’s atmosphere is pretty amazing. Local governments are already dealing with slashed budgets and continuing softness in the economy, and this tax elimination would take another $1 billion out of their coffers. Some of the leaders screaming “Stop!” at the General Assembly are good Republicans, and GOP legislators must be nervous about alienating their own party members.
The legislators still have an appetite for tax reform, however, which is a good sign that they will stay focused on making the state business friendly, which is the most effective economic development tool there is. Indiana has done a good job at making the tax code more sensible, but this particular tax puts us at a competitive disadvantage with neighboring states such as Illinois that have eliminated it.
“The problem with the business personal property tax is it taxes capital investment,” says Rep. Eric Turner, R Cicero. That weakens the very type of business growth we should be encouraging.
Senate Republicans’ counter-proposal would be to eliminate the tax for small businesses and cut the corporate income tax. The House GOP’s approach, which we think is headed in the right direction, would give counties the option of eliminating the tax or keeping it. Some counties have a lot of manufacturing and some don’t – local leaders with local knowledge are in the best position to know whether keeping or eliminating the tax would be the best option.
We also like one of the ideas we’ve heard from Pence, which is to gradually eliminate the tax and make sure the state replaces the lost funds as it goes along. That could create financial stress in other areas, but the tradeoff would likely be worth it.
All the ideas out there should be discussed as this healthy debate proceeds. Many states are in desperate situations because of ruinous economic policies, and they’re taking steps guaranteed to make things worse, such as raising taxes. Indiana’s sober fiscal restraint has left us in better shape. And most of our leaders seem determined to keep us on the same path. That is worth celebrating.
http://www.news-sentinel.com/apps/pbcs.dll/article?AID=/20140116/EDITORIAL/140119738/0/SEARCH
