From the Indianapolis Star:
A proposal that would cut Indiana’s corporate income tax rate by a quarter and eliminate an equipment tax on small businesses cleared its first hurdle Tuesday in the state Senate.
The Senate Tax and Fiscal Policy Committee approved the measure 7-2 after hearing about three hours of testimony.
Under Senate Bill 1, corporate income taxes would be reduced from 6.5 percent to 4.9 percent by 2019. That represents a tax cut of $131.8 million for Hoosier bus.inesses.
Some of that money — $24.7 million — would be recouped by cutting or eliminating tax credits for things like research and development and gifts to colleges and universities.
Despite overwhelming support from the business community, some companies — including pharmaceutical giant Eli Lilly and medical device maker Cook Medical Group — expressed reservations about the proposed 50 percent reduction of the research and development credit.
Gretchen Gutman, vice president of public policy for Cook, said the industry is already facing a new federal tax on medical devices and the recent expiration of a federal research and development credit.
Reducing Indiana’s credit “discourages companies to innovate and lead in this field,” she said.
Local government officials also took issue with a portion of the Senate proposal that would eliminate a tax on business equipment for small companies.
Indiana cities, counties, schools, and libraries depend on the business equipment tax for about $1 billion in annual revenue. Gov. Mike Pence has called for phasing out the tax, but has said lawmakers should decide how to prevent local governments from feeling the pain.
The Senate proposal is tame when compared to a complete elimination of the tax. It would cut the tax only for businesses with less than $25,000 worth of equipment. That would free 70 percent of Hoosier businesses from the tax, but because they pay very little tax now, it would only cost local governments $24.1 million in revenue.
A competing bill in the House would give counties the option of completely eliminating the tax on new investments. It is unclear which proposal will emerge by the time the legislature finishes for the year — no later than March 14.
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http://www.indystar.com/story/news/politics/2014/01/21/indiana-senate-panel-oks-cut-in-corporate-income-tax/4709041/
