News From Terre Haute, Indiana

December 7, 2013

Q&A: Wabash Valley legislators reply to questions on business tax proposal

Howard Greninger
The Tribune-Star

TERRE HAUTE — EDITOR’S NOTE: The Indiana General Assembly is expected to consider a proposal to eliminate or reduce the business personal property tax when the 2014 session gets under way in January. Tribune-Star reporter Howard Greninger asked Wabash Valley legislators four questions related to the proposal. The questions were submitted in writing via email, as were all of the responses but one; Kreg Battles gave his answers by telephone, they were typed and he approved the written version. John Waterman responded to the four questions with two paragraphs, listed in his answer to question 1. The questions and answers are below.



1) Do you support the elimination of Indiana’s business personal property tax? Why?



Rep. Alan Morrisson, R-Terre Haute, District 42

I have had the opportunity to meet with a large number of business owners, local leaders and Hoosiers in West Central Indiana about the issue of reducing, eliminating or keeping Indiana’s business personal property tax the same. Right now, I’m in the process of gathering input from those affected by this tax and weighing both sides of this issue. House Speaker Brian Bosma mentioned on Organization Day that this issue is part of our 2014 legislative agenda, and I look forward to continuing to have discussions with Hoosiers, looking at the legislation once it is authored and making an informed decision in the best interests of those I represent. I encourage you to contact me with your thoughts, concerns or suggestions.



Rep. Clyde Kersey, D-Terre Haute, District 43

I am opposed to the elimination of the business personal property tax. Local governments will lose millions of dollars in revenue if this tax is repealed. Cities and towns are having a hard time paying the bills, and if this tax is repealed they will be forced to, in some cases, lay off police, firemen and city employees.



Rep. Jim Baird, R-Greencastle, District 44

The legislative process is designed to thoroughly vet issues affecting our state and its citizens. No one wants to pay more taxes than is necessary to fund the essential functions of government, and everybody has a different prospective about which functions are most important. Consequently, the challenge becomes trying to adequately fund essential services for the most citizens while minimizing the tax burden to Hoosiers. With that in mind, I look forward to having discussions during session, listening to Hoosier input and coming up with a solution that provides the largest benefit to them.



Rep. Kreg Battles, D-Vincennes, District 45

It all depends on the details. My biggest difficulty with this issue is, first we have state government making decisions on something we have no skin in the game. Personal property tax from businesses will all go to local government and local schools. To me the biggest question is how are we going to replace that revenue. Is the state going to replace that money?

I think it behooves the state, and I think it is our responsibility, to replace that funding in some way or another. If that doesn’t happen, that tax responsibility doesn’t completely go away. At least part, if not all of that, will be shifted onto residential property, agricultural ground or to rentals. What kind of burden does that make?

We also have property tax caps in place, which I didn’t support. If there is a shift in the tax rates, tax caps will only further exaggerate the short funding from those caps for schools and local government.



Rep. Bob Heaton, R-Terre Haute, District 46

One of my main priorities is to help build an economic climate conducive to job creation. Indiana is one of the best places to do business in the country, but more work needs to be done in order to employ Hoosiers and bring the unemployment rate down. Recently, Ways and Means Chairman, Tim Brown, as well as Speaker Bosma voiced their support for eliminating the business personal property tax to spur economic growth. We, as legislators, are responsible for keeping Indiana competitive among other states in order to attract businesses here, employing more Hoosiers.



Sen. Tim Skinner, D-Terre Haute, District 38

I do not support the elimination of Indiana's business personal property tax at this time. This tax cut will result in roughly $1 billion in losses to local units of government and schools across the state. The Republican leadership in both chambers claim to be “very sensitive” to this loss but have offered no solutions to the problem at this time. Should every city, town, and public school student in Indiana suffer in a new desperate attempt to attract business into our state. Weren’t we told the corporate reform of the Daniels Administration would do that? Didn't Daniels lead us to believe that corporations would be knocking our doors down if only we would pass his Right to Work legislation?

Indiana now offers one of the most friendly tax climates in the entire country for business. I have this notion that we need to sell our state to business based on the wonderful opportunities our state has to offer with our public schools, libraries, parks and recreational activities, and or amazing wealth of colleges. All of which will be negatively affected by this proposal. Daniels and his cronies spent two terms pointing out what is wrong with Indiana. Did he not think the image he created of Indiana would make us less desirable to business on the national stage? Allowing Indiana’s cities, towns, colleges, and schools to decay from a lack of funding has never, and will never, attract people or business to our state.



Sen. John Waterman, R-Shelburn, District 39

As a general rule, I support cutting taxes. But in this case, the issue comes from finding a way to replace the over $1 billion this tax provides to help fund our local governments. If the legislature can find a way to do that without simply shifting the burden to individual taxpayers of this state, I will certainly consider the measure.

Talking about Indiana's tax system and how to make it more competitive is always an important discussion for state leaders. Many experts say that cutting business personal property tax would help our economy, but before we can take any steps in that direction, the state has to have a financially responsible plan for carrying it out. As always, I would encourage the constituents in District 39 to let me know their thoughts on this issue.



 2) If not eliminate, do you support a reduction in this tax? Also, why?



Rep. Alan Morrisson, R-Terre Haute, District 42

Currently, no legislation has been drafted that would either eliminate or reduce business personal property tax, so it is hard to speculate on which choice would be better for Hoosiers.



Rep. Clyde Kersey, D-Terre Haute, District 43

 I am opposed to the elimination of business personal property tax, but I might support a reduction in personal property taxes for small businesses. Small businesses create over 90 percent of all new jobs in Indiana and a reduction in the personal property tax for small businesses might create jobs.



Rep. Jim Baird, R-Greencastle, District 44

This issue requires a fiscal analysis and review by the Indiana General Assembly, and without such vetting, forming final opinions at this stage circumvents the process. It would seem prudent to me to continue the evaluation of such a proposal including an analysis of its impact on all Hoosiers.



Rep. Kreg Battles, D-Vincennes, District 45

 I will listen to a reduction. This is a $1 billion statewide impact. If reducing the tax, as opposed to eliminating, is an easier way to come up with funds to replace that revenue lost, that is something I would certainly look at, and quite honestly, tends to make it more economically feasible.



Rep. Bob Heaton, R-Terre Haute, District 46

Whether it is reduction or elimination, I will support the option that provides the largest benefit to Hoosiers. However, without the legislation or knowing the impact it will have, it is difficult to know which option is best.



Sen. Tim Skinner, D-Terre Haute, District 38

A reduction would be more acceptable than a total elimination, but I would still not support this proposal without a feasible plan to replace the revenue to local governments and schools.



3) What do you see as a reason(s) for eliminating/reducing this tax?



Rep. Alan Morrisson, R-Terre Haute, District 42

After speaking with business owners, many of them have mentioned that eliminating or reducing the business personal property tax will allow them to keep more of the money they earned. In turn, those gains could potentially become higher wages for employees, investment back into the company or community as well as additional jobs, services and products being created.



Rep. Clyde Kersey, D-Terre Haute, District 43

Those who support the repeal of the personal property tax claim that it will create jobs for big business, but they said the same thing when they eliminated the inventory tax and cut corporate income taxes by 2 percent. Companies did not break down the door to come to Indiana and Indiana's unemployment rate is still higher than the national average.



Rep. Jim Baird, R-Greencastle, District 44

Eliminating business personal property taxes creates a more favorable business climate and those dollars could be used to expand their operation in order to create jobs and opportunities for Hoosiers. Prospectively, if that would attract more businesses to locate in Indiana then I believe the issue is certainly worthy of discussion.

 

Rep. Kreg Battles, D-Vincennes, District 45

The truth is it all depends what is replacement. If it does create a better business environment, that is something I would have to look at very carefully. That is the reason that has been touted. I want to see what kind of research supports that. I see a lot of anecdotal stories that are told, then told as fact. If I could support it, I want to know does it increase business growth and expansion and potential jobs. I want to see some kind of study on that, not anecdotal evidence.



Rep. Bob Heaton, R-Terre Haute, District 46

By eliminating the business personal property tax, like our neighboring states, business owners I have met with believe that this will encourage companies to increase their investments here in Indiana. Not to mention, Hoosier businesses will retain more of their earnings which can lead to increased wages or additional employees hired.



Sen. Tim Skinner, D-Terre Haute, District 38

I understand that Michigan, Ohio, and Illinois have either eliminated or made reductions in this tax already. The supporters claim that Indiana is at a competitive disadvantage because we still have the business personal property tax. To compare apples to apples, I believe the corporate tax reform of the Daniels Administration must be taken into account when comparing Indiana to our neighbors. Much of our tax restructuring was designed specifically to give Indiana a tax advantage over our neighbors. We currently offer incentives and credits that our neighbors do not have. As always, there is no guarantee that this billion dollar idea will be the one great thing that will attract business to Indiana, but we do know what the consequences will be for our cities, towns, and schools.



4) What do you see as a reason(s) for maintaining the tax as-is?



Rep. Alan Morrisson, R-Terre Haute, District 42

I have heard several concerns from local government leaders on this issue, so it is important to consider the effects this might have at the local level. We need to make sure they continue to be able to provide those vital services to Hoosiers, and I intend on continuing to meet with them about this issue.



Rep. Clyde Kersey, D-Terre Haute, District 43

If we eliminate the tax local governments will lose millions of dollars in revenue and eventually the local taxpayers will be forced to pay an increase in taxes to make up for the revenue lost by the elimination of the personal  property tax.



Rep. Jim Baird, R-Greencastle, District 44

Local units of government depend on these taxes as one source of revenue for balancing their budgets and providing local services. Any consideration of such legislation would need a thorough analysis of its impact on local government.

 

Rep. Kreg Battles, D-Vincennes, District 45

The main reason to keep the tax remaining is to support a well rounded tax base locally and prevent the potential harm that could be done to local governments if that revenue is not replaced by the state. There will be potential winners and losers, and there will be some losers in this because of the subsequent tax shift that would result.



Rep. Bob Heaton, R-Terre Haute, District 46

It is important that we consider the impact this will have at the local level. As Chairman Brown mentioned, we need to look at options for them and make certain that they are not hindered by a potential loss in revenue.



Sen. Tim Skinner, D-Terre Haute, District 38

Revenue reports through November should be available by the end of this week. I think Indiana is slowly recovering from the recession, but I do not think we are showing the consistent growth across the board to entertain a billion dollar reduction at any level of government. Indiana Individual Income Tax receipts are $67.1 million below target for the first four months of this current fiscal year, and maybe even more telling we are $76.6 million below this same period in fiscal year 2013. Corporate Income tax for the first four months of 2014 are $25.8 million above forecast, but 5.5% below this same period last year. I would feel more comfortable with revenue streams showing consistent growth year over year.

I believe we all want what is best for Indiana. I chose long ago to make my home outside of the beltway of Indianapolis, I love my community, and believe it is my responsibility to voice my concern when I see policies than show potential harm to those of us in Senate District 38. I need to be convinced that this legislation will do us no harm.