Indiana lawmakers draw close on business tax deal

Indiana lawmakers appear close to approving a package of business tax cuts that represents only a fraction of what supporters sought at the beginning of the session.

The House Ways and Means Committee and the Senate Tax and Fiscal Policy advanced two separate measures Tuesday that would cut the state's corporate income tax and the state's business equipment tax in certain cases. But a few key differences remain that will keep lawmakers negotiating to reach a compromise before their 2014 session ends next month.

Neither plan will come close to the complete elimination of Indiana's business personal property tax that Republican Gov. Mike Pence originally sought when the 2014 session began. But House and Senate lawmakers were able to agree on an alternative measure that could save Indiana's heavy manufacturers millions of dollars.

Both proposals include a so-called super abatement, which would allow county leaders to exempt companies from the tax for up to 20 years. Counties can currently exempt businesses from the tax for up to 10 years, and often do so as a means to lure development.

"I think this alternative is not only fiscally responsible but reflects the ability of local government to affect local control," said Senate Tax and Fiscal Policy Chairman Brandt Hershman, R-Buck Creek.

The Senate panel voted 8-4 Tuesday to approve a plan that would cut the corporate income tax from 6.5 percent to 4.9 percent by 2022. It would also allow counties to set "super abatements" and eliminate the equipment tax for small businesses with less than $20,000 worth of equipment.

The House panel approved a similar measure, 11-5, but kept in the so-called local option, which would allow counties to decide whether to eliminate the tax for new businesses and new equipment purchases.

Neither plan includes the "replacement revenue" local leaders have sought as a backfill from the state to cover losses they would take as a result.

Matthew Greller, executive director of the Indiana Association of Cities and Towns, called the altered proposals improvements, but said he would like to see more to protect local leaders.

"It's definitely moving in the right direction in terms of where we started on the business personal property tax and where we need to go" Greller said.

Senate Democrats, who are vastly outnumbered by Republicans, complained they were left out of the discussion and ended up voting against the plan.

"I guess I'm complaining because we weren't really a part of the discussion, and that bothers me to some degree," said Sen. Tim Skinner, D-Terre Haute.