Lawmakers recommend cutting equipment tax

Indiana should eliminate its business equipment tax for small companies in order to spare them a burden that collects only a trivial amount for the state each year, a panel of lawmakers said Wednesday.

The group studying Indiana's taxes included the recommendation along with a series of other proposals, many dealing in changes with how farmers report taxes, in its final report.

The study committee chairman, Sen. Brandt Hershman, R-Lafayette, acknowledged at the start of Wednesday's meeting that the panel's recommendations do not guarantee a tax cut passing the General Assembly. Any cut is likely to face an uphill battle in the House, where Speaker Brian Bosma, R-Indianapolis, has said the priorities will be school funding and ethics reform.

"The goals contained in the findings are essentially aspirational, there is no time limit, and obviously they would have to go through the legislative process," Hershman said.

Supporters of eliminating the tax that's paid mostly by manufacturers call it onerous and say it costs many businesses more to file each year than it collects for the state. The panel noted that the average small business pays roughly $50 each year and recommended that companies with less than $20,000 of business equipment be exempt.

Indiana Chamber of Commerce President Kevin Brinegar said that eliminating the tax for small businesses could spare 150,000 companies the cost of filing each year.

"We look forward to seeing legislation introduced to bring these common sense next steps to the full General Assembly," Brinegar said Wednesday in a statement.

Gov. Mike Pence pushed unsuccessfully earlier this year for a complete elimination of the tax. But local leaders mounted an aggressive campaign against it, arguing the change would undercut them at a time when they're already cash-strapped.

House and Senate Republicans instead proposed a compromise allowing counties to decide whether to cut the tax, and the measure was approved in the final hours of the session.

The proposal also comes as state tax collections continue to lag. Budget leaders are keeping an eye out for a new set of tax estimates due next month.