INDIANAPOLIS | The Democratic candidate for state auditor is skeptical of Republican Gov. Mike Pence's proposal to eliminate the business personal property tax without a clear plan to replace the $1 billion in annual revenue the tax cut would take from schools and local governments.
Mike Claytor, a Carmel accountant making his first run for statewide office, said Tuesday Indiana already leads the nation in manufacturing employment, and since 2010 has added the third most manufacturing jobs of any state in the country.
"If we are already doing well at attracting manufacturing enterprises — the largest payers of business personal property tax — why do we need to continue making individual tweaks to the tax system?" Claytor asked.
"Changes should only be made based on a study of overall tax bases, tax burdens and the impact of tax shifts."
Claytor said eliminating the tax statewide would remove the temporary abatement and tax increment financing options Indiana local governments often use to lure businesses to their communities.
"There has been no discussion of how local governments are to attract new manufacturing facilities to the state without this key tool," he said.
In addition, Claytor said many existing manufacturing developments across Indiana are supported by local governments using tax increment financing bonds backed by revenue from personal property taxes on the manufacturing equipment.
"If the tax is eliminated, without an equivalent and appropriate tax replacement mechanism, there could be hundreds of millions of dollars in defaulted bonds around the state of Indiana, with many local taxpayers on the hook for the default and numerous lawsuits to try to resolve the issues involved," he said.
State lawmakers are expected to begin considering Pence's tax cut proposal when the Republican-controlled General Assembly convenes Monday.
The governor has said eliminating the business personal property tax is necessary to keep Indiana's already top-rated business tax climate among the best in the nation.
He claims the tax can be phased out or replaced in such a way that "does not unduly burden" schools and local governments, though Pence said he's leaving those details to the Legislature.
Claytor likely will face Republican State Auditor-designee Suzanne Crouch, who takes office Thursday, in a November general election match-up, assuming both are nominated this summer at their party's state convention.