Gregory Porter: Law harms efforts to pay down debt, retain workers

After Eli Lilly and Co. CEO David Ricks’ bleak take on the attractiveness of Indiana to businesses and workers alike, it’s clear that the GOP tactic of cutting taxes and offering tax credits for business without bold investments in education, quality of life or public health has set us on a course for ruin if we do little to correct it. If anything, Republican policy has actively undermined smart ideas to solve problems by way of the free market.

Indiana’s college graduates who have student loan debt owe $30,000 on average. This significant burden holds millennials and now Gen Z back from homeownership, starting families and putting money back into their local economies. The federal government has thankfully assisted those with student loans by pausing student loan payments through the pandemic.

Not acting on this burgeoning crisis is bad. But actively undermining businesses’ efforts to offer relief to employees is even worse—and an action the General Assembly took this past legislative session in the form of an apparently “unnoticed” provision in Senate Enrolled Act 382.

Say you’ve just been hired by an employer that offers paying down the principal of your student loans as one of its benefits. Well, under the provisions in SEA 382, that employer contribution is now considered income and is thus taxable in Indiana, even though the federal government doesn’t tax these contributions. Many other states do not tax this employer-supported relief, either—meaning Indiana is once again standing out for its state-mandated cruelty.

As a conforming tax state, Indiana adopts all aspects of the federal tax code for our state taxes unless lawmakers draft language to remove or change parts of the Indiana state income tax code. This is one such provision, meaning Republican lawmakers actively went out of their way to disallow the easing of the burden of student loan debt.

What to make of this slap in the face to those with student loan debt? Like clockwork, every few months we are hit with comments from community leaders like Ricks or a new study showing that other states are out-competing Indiana in economic development or simple quality-of-life outcomes. We are at a crossroads for determining our state’s future success: Either we keep doing business as usual, or we decide to invest in our residents’ education, economic welfare and health outcomes.

One such path forward is to fix this provision next session and allow this employer incentive to be what it is: a perk of employment that should fully go toward an employee’s debt repayment.

Another solution is inspired by the philosophy behind the MakeMyMove program. The MakeMyMove incentive program provides incentives like cash stipends, moving assistance, free park passes, vouchers for discounted meals, etc., to a few (usually no more than a dozen) individuals. As a result, the recipients of this program relocate to rural areas and a few smaller urban areas to help “jump start” the economy, increase the tax base and infuse talent in these locations for people who can now work remotely. Even this initiative—which, with the General Assembly’s current composition, will certainly benefit GOP legislators’ districts more than Democrats’—was not funded by the Republican supermajority in the 2021 legislative session. Instead, local governments have led the lonely charge for funding this program.

It is true that we must encourage young people to live in all parts of our state. But we also want young people to stay in our state. Indiana needs to start a “HelpMeStay” program by providing relief and programmatic support to recent graduates so they are incentivized to put down permanent roots here. A first step in that direction would be a repeal of the Indiana tax on student loan debt found in SEA 382. So let’s do just that—help our young people stay here.•

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Porter, a Democrat, represents Indianapolis in the Indiana House.