HB 1001, the phase out of Indiana’s business personal property tax, was heard on Tuesday in the powerful House Ways and Means committee and will likely be voted upon in the committee in the coming week. The bill allows the COIT council within the county to adopt an "exemption ordinance" indicating that the county will eliminate business personal property taxes on new equipment. The equipment must not have been previously used in Indiana prior to the taxpayer acquiring it and the exemption does not apply to utility equipment. HB 1001 does not include any revenue replacement options. IACT urges you to contact your Representative(s) immediately on this issue!
SB 1, another personal property tax elimination bill will be heard Tuesday, January 21 in the Senate Tax and Fiscal Policy Committee. This bill exempts small businesses with less than $25,000 of personal property from the personal property tax. Like, HB 1001, there isn’t a replacement revenue source designed to offset the expected $25-$30 million in reductions to local government. The Senate plan also calls for a reduction in the corporate tax and a blue ribbon study of the personal property tax. Again, IACT urges you to contact your Senator immediately on this issue!
Below are a few notes for your discussions with House and Senate Members.
IACT opposes all legislation that contemplates eliminating any portion of the personal property tax without FULL replacement guaranteed by the state. The personal property tax is longstanding and relied upon method for funding local government. City and town governments are not asking for the elimination of this funding source. If the state wishes to eliminate the personal property tax in this fast and furious manner, they need to propose and guarantee an acceptable state implemented funding source that does not unduly harm municipal governments and the people we serve.
Contrary to what you’ve heard, HB 1001 IS NOT a local option. This bills DOES NOT give all cities and towns in Indiana an equal voice in the decision to erase these funds from their budgets. While the COIT council has its purpose, it is a complicated process and in this context it gives the councils the ability to remove significant dollars from the budgets of neighboring communities or their county against the objection of those units.
Business tax elimination shifts burden to workers and homeowners. According to a recent Legislative Services study, property owners across the state who haven’t yet reached the property tax cap would pay an additional $375 million per year to make up for a major tax break the state is offering business owners. It’s simple, with our levy restricted and AV being reduced through the elimination, most tax rates WILL go up. While all local officials want businesses in our communities and all across the state to thrive, this just cannot happen at the expense of homeowners, workers and the cities and towns they live in.
Regionalism will collapse under the provisions of HB 1001. The structure of HB 1001 creates intense competition between every neighboring community and county in the state just as we are learning that regional economic development models are the most successful. This COIT council all for one approach is a backwards step that will pit Hoosier cities, towns and counties against each other.
Growing Indiana’s economy is about much more than a checklist of business taxes. Indiana ranks anywhere from 2nd to 10th in its business climate, based upon whichever ranking report you happen to be reading at the time. This is just one of the recruiting tools necessary for attracting businesses. Growing jobs is about so much more than our tax menu and this kind of old-school economic development is a race to the bottom and not a race to excellence. When companies choose a community, deteriorating parks, failing infrastructure, deferred maintenance on buildings and sidewalks all speak to the quality of life they and their employees can expect in a city or town. In this economy, if we don’t invest in ourselves we will not be the communities where business want to locate and grow.
Replace Don’t Erase! That’s the simple, urgent and critical message to communicate to your lawmakers today! The impact is too great to wait. Reach out now, again next week and all through the session. Do not be swayed by the notion that small chunks, weak “local options” and room within the current income tax framework is adequate. If the state wishes to eliminate this tax than we encourage an intense and global discussion about how we fund government at all levels before anything moves forward.
Links:
Ways and Means Committee Contact Information
Senate Tax and Fiscal Committee Contact Information
Contact Your Legislator