The Indiana General Assembly has barely begun, but Gov. Mike Pence’s push for a full elimination of the business personal property tax already appears to be on life support.
House Speaker Brian Bosma, R-Indianapolis, is calling for individual counties to be allowed to voluntarily phase out the tax.
Senate Tax & Finance Committee Chair Brandt Hershman, R-Monticello, is calling for elimination of the tax for small businesses only. Hershman’s cut would save businesses about one-sixth of what Pence’s plan calls for.
In theory, getting rid of the tax, which detractors say is essentially a tax on all capital investment, could spur economic activity in a state that has been steadily sliding down the rankings for personal income.
“I can guarantee that the personal property tax isn’t going to be eliminated in this session,” State Rep. Mike Karickhoff, R-Kokomo, told a legislative forum in Kokomo last week. “But long term, it’s in our best interest to find a better revenue stream than business personal property tax.”
Even if neither the House Republicans nor the Senate Republicans support simply getting rid of the tax, which generates just over $1 billion a year for local government, even broaching the idea has caused consternation in some areas.
The Indiana Chamber of Commerce, the biggest proponent of the tax shift apart from Pence, has been unequivocal in saying the tax can’t be eliminated without replacement revenue.
“Absolutely no one has called for that money to be taken away without some type of replacement revenue stream,” said the chamber’s vice president of taxation and public finance, Bill Waltz. “There is no way that all personal property tax can be eliminated overnight. That is not going to be the proposal.”
At a local chamber of commerce meeting in LaGrange County last week, Pence indicated he’s not asking for a sudden cut.