The Herald Bulletin

Overnight Update


December 27, 2013

Editorial: Indiana business tax cut would cause schools, government to suffer

Gov. Mike Pence’s plan to phase out business personal property taxes in Indiana would ultimately do more harm than good.

Local schools and government units count on the $1 billion the tax raises yearly to continue providing key services to Hoosiers. Without that money, Anderson, for example, would lose about $4 million a year, something the cash-starved municipality can hardly afford.

Some of the money goes to the general fund, for purposes such as paying police officers and firefighters. Losing the money would also cause local infrastructure to suffer, hindering (rather than helping) the city’s ability to attract new businesses.

While Indiana must strive to stay competitive with other states in the economic development race, elimination of this tax would cut too deep. Pence doesn’t have an answer for how to replace the money that would be lost; he says that’s for the Indiana Legislature to figure out.

If the Legislature could wave a magic wand and make the missing money reappear, then elimination of the business personal property tax would be a good thing. But the Legislature has trouble enough conducting routine business, let alone pulling rabbits out of the hat.

Several years ago, the state’s decision to cap property taxes put lots of public schools systems, including Anderson’s, in dire financial straits. Then, the Daniels administration pulled $300 million out of the education budget to cover other state needs. The loss of business personal property tax money would be akin to kicking schools when they’re down.

The long-range view shows clearly that improvement in K-12 education is a top priority in Indiana. Better education means a better workforce and less need for welfare. The loss of more tax money would send education in Indiana plummeting in the opposite direction.

Now is not the time, Gov. Pence, to get rid of the business personal property tax — that is, unless you come up with a plan for replacing the money in school and local government budgets.

In summary While Indiana must strive to stay competitive with other states in the economic development race, elimination of the business personal property tax would cut too deep.

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