Need to Know: Indiana Senate Budget
As we shared last week, the Senate took a very positive step in putting forward a budget that at least provided some meaningful tax relief. While it’s still nearly $500 million short of what was originally presented by Governor Pence, we cannot ignore that the tax relief portion was at least substantially better than the House proposed budget (just $7 million in new relief). It is also positive that the inheritance (death) tax would be gone once and for all.
|New Tax Relief
FY 14 – 15
|10% Income Tax Cut -
$772 million over next two years
|Accelerated phase out of the Inheritance Tax – $7 million over the next two years||3% Income Tax Cut – Starts Jan. 2015 – $70 million over the next two years.|
|Immediate Elimination of the Inheritance Tax – $180 million over the next two years.|
|Financial Institutions Tax Rate Reduction – Starts 2014 – $30 million over the next two years|
Now, there are things about the Senate budget that are troubling that you should know as well.
1) The income tax cut proposed in the Senate budget, while a good first step, is slow to start. Hoosier taxpayers would have to wait until January 2015 to see this tax cut.
2) The Senate budget encourages county governments to adopt a wheel tax by providing a matching state fund. Local governments will only get these dollars if they enforce a wheel tax. It also allows what is known as a “County Income Tax Council” to adopt these taxes as well as the County Council, which means a wheel tax could be more easily adopted. Do you want your tax break only to have it taken by your local government?
3) It reinstates a $40 million subsidy to the Horse Racing Industry that was previously cut out of both the Governor’s and House’s budgets. I like Horses too, but do they deserve a tax break before you do?
4) It moves $1 billion from our state’s reserves (rainy day funds) and puts them in separate reserve funds for future spending projects. This basically tees up future spending, and it makes it more difficult to trigger an automatic taxpayer refund which happens when state reserves total over 12.5% of spending. Is this really the best way to prepare for Indiana’s future needs?
Some may ask, why this fixation on tax relief? The simple answer is because it’s the right thing to do and it’s YOUR money. Do any of us really think that government is better at spending our money than us?
Before discussing spending increases our state policymakers should really be looking for ways to get more money back to you – the taxpayer. This is important not just because it makes your life better, but because it will make all of our lives better. When Indiana’s economy grows because taxpayers and small businesses are able to keep more of their money – we all win!
If we can do this, all us Hoosiers will share in the prosperity that follows.