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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndiana Senate Republicans are not moving forward with their own tax cut proposals aimed at reducing business personal property taxes and offering a temporary sales tax holiday, casting doubt on a key provision in the House Republicans’ $1 billion tax-cut plan.
Republican Sen. Travis Holdman, chair of the powerful Senate Tax and Fiscal Policy Committee, pulled a bill that would have reduced the depreciation floor applied to business personal property taxes on equipment, from the committee schedule on Tuesday morning.
Senate Bill 378 would have phased the 30% depreciation floor down to 27.5% in 2023 and 25% in 2024. Businesses currently have to pay a tax on at least 30% of the purchase price of machinery and equipment every year, even if the equipment is several years old and no longer worth 30% of its original cost.
The proposed floor phase-down was projected to have a $140 million impact on local government revenue generated from business personal property taxes, according to a fiscal analysis on the bill.
For that reason, Holdman said he found it hard to vote for any tax cut that would have a negative impact on local governments. Relying on the property tax levy growth alone would not be enough to pay off the potential debt incurred by communities who count on that revenue, he said.
He said those same reservations make him hesitant to consider the business property tax cut contained in the House Republicans’ broad tax-cuts package that is moving to the Senate after it passed House floor last week with support from most of the GOP majority.
The proposed House package would cut $1 billion in individual and business taxes by 2025. It includes eliminating the entire 30% floor on the business personal property tax for new equipment purchases starting this year, which would have a local impact of $10 million by 2024, $34 million by 2025 and up to $103 million by 2037.
“It’ll be tough for me to accept any version of that bill when it comes across to us,” Holdman said.
Holdman told IBJ that another tax cut bill he authored to create a sales tax holiday also won’t be heard this session. The bill would have created a 17-day holiday this year where the state’s 7% sales tax would have not been applied to any retail item purchases within the timeframe. Holdman said he filed it to put all tax cuts options on the table to consider, but he decided in the end to not give it a hearing in the Tax and Fiscal Policy Committee.
The deadline for bills to be heard in committee to be considered for passage in the Senate is on Thursday. Not moving their own tax cut proposals through committee further solidifies Senate Republicans’ hesitant position on tax cuts this session.
Holdman said that his main issue with the current tax cut proposals is the business personal property tax aspect affecting local governments, not particularly with the other aspects of the House tax cuts plan that also includes reducing the individual income tax from 3.23% to 3%.
He said some adjustments could be made to the business personal property cuts proposal. Instead of reducing the tax, Holdman is looking at increasing the minimum threshold at which business property would be subject to the tax—from $80,000 to $100,000—to benefit smaller businesses.
“I don’t disagree that there are some cuts for small business that we could still do,” Holdman said. “The massive change in the tax structure for funding local government to that revenue stream, that worries me greatly.”
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Wow! Thank you, legislators You are beginning to think about the future rather than votes today. Onward for the benefit of Indiana and its citizens.
What a novel idea… thinking through the impact of legislation before actually passing it! Funny that this so rarely occurs, but maybe this is the start of a positive trend.
Why don’t we just go ahead and add every single taxpayer to this and tax everyone’s assets at 30% every year, even when they depreciate far less than that? This would be cars, boats, homes, etc… When you are a business, this tax applies to EVERYTHING, including things you still have financed. Got anyone thinking yet? It is totally unfair for businesses to foot the bill with this extremely unfair tax.
That’s fine. It’s not a budget year, our finances are only flush because of one-time government handouts, and there’s no replacement revenue proposed.
Spending that Biden money on retiring debt or fixing roads that need repair makes sense. Using that money to cut taxes makes as much sense as cashing out all your retirement savings the month before you retire on a new house. Shiny, new, and you now have no way to pay for it except to keep working.