Southern Indiana Business Report
INDIANAPOLIS — The Indiana General Assembly has adjourned Sine Die, ending the 2022 legislative session. And while the Indiana Chamber of Commerce and Indiana Manufacturers Association (IMA) offer some praise for the results, both groups express concern over what they’re calling a missed opportunity to reform the personal property taxes they’ve argued are hampering Hoosier manufacturers.
Indiana Chamber of Commerce President and CEO Kevin Brinegar said the 2022 Indiana General Assembly concluded “overall in a good place” for the rights of businesses, for the state’s economy and for talent attraction and growth.
The Indiana House and Senate reached agreement on HB 1002 to cut income taxes, dropping the state’s individual income tax from 3.23% to 2.9% over seven years, and eliminate the 1.46% Utility Receipts Tax (URT). The Indiana Chamber and IMA support these changes, with the latter group pointing out the elimination of the URT will help Indiana manufacturers reduce the cost of utilities, of which they are major consumers.
Noting the record state surplus, Brinegar said the reduction in the state income tax rate for all individuals and pass-through businesses was warranted. And he said the paydown of the $2.6 billion of the longstanding pension obligations for teachers will serve to free the state of future payments in budgets going forward.
The bill did not, however, include a reduction in the business personal property taxes paid to local units. The Indiana Manufacturers Association said the provision would have made Indiana a more competitive state for capital investment. Without this provision in the bill, the organization notes, Indiana will continue to have the highest floor on equipment depreciation in the country.
“The message from IMA members has been clear: While Indiana has a great business tax climate, making equipment and technology upgrades is expensive in Indiana compared to other states, and that has economic consequences for Indiana’s largest industry sector: manufacturing,” said IMA President and CEO Brian Burton. “Gov. Holcomb, Speaker Huston and Ways and Means Chairman Brown listened to those concerns and supported a solution that gradually reduced the cost of those investments. Unfortunately, the Senate decided to listen to local government and opposed this provision. This was a missed opportunity to help businesses of all sizes. The Indiana Manufacturers Association will continue to support efforts to promote pro-growth policies that focus on private-sector investment and help all Indiana businesses.”
Brinegar was likewise dismayed and called the decision a “head-scratcher given Indiana’s incredibly strong finances.”
He continued, “… we were extremely disappointed that the Senate blocked the phaseout of the 30% depreciation floor on business equipment and machinery. That tax requires businesses to pay at that value even after the personal property has greatly depreciated below it. It’s unfortunate that Senate Republicans fail to see that this shouldn’t be happening and only serves to discourage large capital investment in Indiana. Getting rid of this tax would infuse our economy and add jobs.”
Brinegar did go on to praise three other pieces of legislation: SB 361, which focuses on remote worker attraction and talent retention; HB 1153, workers’ compensation fix and increase; and SB 82, formally urging high school seniors to complete the Free Application for Federal Student Aid (FAFSA).