EDITORIAL: Think carefully before abolishing tax

2013-12-15T00:00:00Z EDITORIAL: Think carefully before abolishing tax nwitimes.com
December 15, 2013 12:00 am  • 

In trying to make Indiana more business-friendly, Gov. Mike Pence said he would like to eliminate the personal property tax. It's a costly endeavor.

Eliminating the personal property tax would affect businesses, not individuals — until it's time to determine how to make up for all that lost revenue from businesses.

To put this in perspective, look at how high these stakes are. This tax break for businesses, the centerpiece of Pence's legislative agenda, would be a $1 billion windfall for the state's businesses.

This is a tax the state controls, but it's revenue for local government, not the state.

The impact would be biggest where there is a major industrial presence. Lake County alone would lose $109 million a year (17.5 percent of county property tax revenue), and Porter County would lose $25 million (13.4 percent).

Schools, municipalities and other units of local government can't afford to take a big hit like this. Contrary to the free lunch theory, every tax break businesses get has to be paid for. 

So what would replace it?

The trend in Indiana is to shift the burden of supporting government off the business sector and onto individuals. 

Pence isn't ruling out a county income tax increase. In Lake County, that would mean doubling the recently enacted 1.5 percent county income tax.

But keep in mind Indiana already is rated among the top business-friendly states. Also, Indiana lags the nation — ranking about 40th — on per capita personal income. And Indiana has one of the highest state sales tax in the nation.

Further, many states are working to lower income taxes because they realize business owners and managers do not like paying individual taxes, either. 

Eliminating the personal property tax would be good for business, to be sure, but consider the consequences and come up with a solid plan for replacing that lost revenue before quickly eliminating this tax.

Legislators will need to think long and hard before asking the citizens to pay a lot more to give businesses a big tax break.

That tax break for businesses would be an enormous burden for individual taxpayers. There's a limit to how many more straws that camel's back can take.

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