Brinegar: Tax cut a ‘prudent’ move by legislature
INDIANAPOLIS (Inside INdiana Business) — The president and chief executive officer of the Indiana Chamber of Commerce says the multi-year tax cut approved by the Indiana General Assembly this week will bring benefits. “Putting money back in the economy and back in the taxpayers’ pockets, both individuals and businesses, was prudent given the state’s incredibly strong fiscal position,” said Kevin Brinegar. However, he expresses disappointment that the chamber’s top tax priority of eliminating property taxes on business equipment failed to make it through the legislature.
Brinegar discussed the tax cut and other moves by the legislature in an interview with Inside INdiana Business.
“There’s going to be some nice tax relief for both individuals and businesses through the repeal of the utility receipts tax, which will lower utility bills, which will help maybe offset some of the increase in gasoline prices that we’re seeing, and they’re going to phase down the individual income tax,” said Brinegar.
The individual income tax rate is set to go from 3.23% to 2.9% over a seven-year period. However, the cuts won’t be automatic.
The tax rate would be cut to 3.15% for 2023, creating a $40 savings for those with $50,000 in taxable income. The tax rate would then be cut further in 2025, 2027 and 2029, but those cuts will only happen if state tax revenue grows by at least 2% in the previous budget year.
“It may not be that noticeable, but that will not only benefit individuals, but will benefit almost all the businesses in Indiana that are what we call pass-through entities, where they pay their business income tax liability on the individual income tax returns of their owners and shareholders,” Brinegar said.
Brinegar says the chamber was focused on phasing out and eliminating the 30% depreciation floor on business machinery and equipment property taxes. Senate Republican leaders objected to the cut citing concerns of the potential impact on local government revenues.
The cut could have saved businesses nearly $400 million annually.
“In many instances, businesses end up paying on a 30% value when the actual value is less than that and that’s just simply not fair,” he said. “The impact of this doesn’t occur at all on local government for at least eight years, and then it’s not cutting their current revenues; it’s taking a sliver off of their growth rate in future years. So, they’re still going to see growth in their property tax levies, plus they’ve got other resources.”
Brinegar adds the elimination of the property taxes would also create an economic stimulus by allowing businesses to invest in new equipment, which would sustain and create jobs that would grow income tax revenues at the local level.
The legislature also approved Senate Enrolled Act 361, which Brinegar says helps the Indiana Economic Development Corp. modernize its toolkit and make it more competitive.
“It gives them more flexibility on how to use funds, rather than having them in specific silos,” he said. “Another bill, Senate Bill 4, was included and added bill will give local units of government more flexibility to take excess funds that are in certain silos currently specified for specific purposes and pool them so that they can use those for talent attraction and quality of place initiatives.”
Next year’s Indiana General Assembly will be a budget session and Brinegar says the chamber’s top priority will be boosting the state’s workforce.
The Associated Press contributed to this report.