INDIANAPOLIS | Hoosier businesses would see their state income tax rate fall 1 percent to 6.5 percent this year and drop to 4.9 percent by 2019, under a tax cutting plan unveiled Thursday by the budget leaders of the Republican-controlled Senate.
State Sen. Brandt Hershman, R-Buck Creek, and state Sen. Luke Kenley, R-Noblesville, said the business tax cuts in Senate Bill 1 will create jobs by luring companies to the state and encouraging existing Indiana businesses to expand.
"This effort will catapult Indiana into a leadership role nationally with respect to our tax rate," Hershman said. "It puts a sign out saying that Indiana is ready for business."
When fully phased-in, the lower corporate income tax rate is projected to reduce state revenue by $132 million. Hershman said a portion of those losses will be made up by eliminating or reducing current business tax credits.
In addition to cutting business income taxes, the plan also calls for exempting companies with less than $25,000 in taxable business property from paying the business personal property tax.
Hershman said many small-business owners have found the cost of compiling and filing business personal property tax documents exceeds the amount of tax they owe.
He said exempting the 71 percent of businesses under the $25,000 asset threshold will save those companies time and money that could be put to better use.
"We think this represents a fiscally responsible measure that will have long-term benefits for Hoosier businesses and Hoosier workers," Hershman said.
Kenley acknowledged schools and local governments statewide would lose about $30 million from reduced business personal property tax collections.
Though he said that's nowhere near the more than $1 billion impact if Republican Gov. Mike Pence succeeds in his efforts to eliminate the tax altogether.
Senate Democratic Leader Tim Lanane, D-Anderson, said it was nice of Senate Republicans to throw Pence a fig leaf in his never-ending quest to cut taxes. But Lanane believes the state should invest its resources in the health and education of Hoosiers, instead of giving more money to businesses.
"It's about time we take a look at fairness. How about the average citizen and what they're expecting?" Lanane asked. "Does everything have to be just for business?"