Reforming Indiana's Business Personal Property Tax
Below is the testimony of AFP Indiana State Director, Chase Downham, to the House Ways and Committee in support of House Bill 1001 which would reform Indiana’s business personal property tax.
Mr. Chairman, members of the committee, good afternoon. My name is Chase Downham. I am the Indiana State Director of Americans for Prosperity. Americans for Prosperity is the state’s largest grassroots organization dedicated to advancing policies that promote economic freedom, protect taxpayers and give Hoosiers the best opportunity to increase their individual well-being. Today, we have nearly 50,000 activists located across our state in all 92 counties.
I am here today to encourage you to support House Bill 1001.
Collected and retained exclusively at the local level, the business personal property tax annually takes nearly $1 billion from Hoosier companies and the jobs they could create. Eliminating or reducing the tax would help Indiana continue to compete with its neighbors across the Midwest. In fact, save for Kentucky, Indiana is the only state in the Midwest which has not eliminated the tax. Michigan will seek voter approval for their elimination efforts later this year. According to a study performed by the Anderson Economic Group, Michigan’s efforts are expected to create up to 15,000 jobs—jobs that could be coming to Indiana instead.
But I understand there are some concerns.
Some argue that cutting or eliminating the business personal property tax would automatically lead to higher taxes for other property taxpayers, particularly in those counties that have rely heavily on the business personal property tax.
I believe this argument ignores the opportunity for economic growth resulting from the tax cut, and it relies on the incorrect assumption that budgets are fixed and reductions in spending will not or cannot happen. Just as eliminating the business personal property tax affects counties differently, counties could also deal with the new tax structure in different ways. Some counties may choose to cut wasteful spending. Others may reform their operations. Perhaps a handful would go to their voters to seek other tax increases (which voters could reject), and a few may do nothing. Of course, with any of these decisions local officials would have to answer ultimately to voters.
Yet, in recognition of this concern and others, I believe you have in front of you a common sense solution.
House Bill 1001 gives counties the option to simply eliminate the tax on new investments. This diminishes the need for a revenue shift that could occur by either raising local income taxes or some other means. It also recognizes the delicate nature of this issue by giving counties the option whether or not to pursue this tax cut. If we are going to hear time and again how local governments need more options to increase revenue, I think it is fair and reasonable to give folks the option to cut taxes as well. Most importantly, House Bill 1001 encourages economic growth by incentivizing new investments while not touching the bulk of current local tax revenues.
We are hopeful you take this idea as a starting point. House Bill 1001 is a proposal that encourages economic growth, recognizes local concerns and protects taxpayers.
Thank you for your time. I would be happy to answer any questions you might have.
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