Economists differ on which state budget plan would benefit Hoosiers most

Pence, Senate Republicans apart on tax cut

INDIANAPOLIS - A budget battle is brewing at the Statehouse, and Hoosier families have a lot at stake in the outcome.

Gov. Mike Pence and Republican lawmakers have conflicting plans when it comes to reducing income tax.

The Pence plan would cut the state income tax 10 percent.
Senate Republicans would cut it less than 3 percent, but they would cut other taxes on business and inheritances as well, and their budget would put more money into schools and roads.

Economist Matt Will of the University of Indianapolis said the Senate plan could better boost the Indiana economy.

"It's direct infusion of cash into the economy. When you're talking about inheritance taxes, corporate taxes, financial institution taxes, when those things go down, the dollars go straight to the company that's hiring the workers," Will said. "So if you want to cause employment to increase, that is going to be an advantage to the economy versus the other one."

But Butler economist Bill Rieber said that money from the Pence plan could be useful to families.

"For many families, that would be $50 to $60 a year. That doesn't seem that much, but on the margin for a typical family, those funds could be useful to help finance different expenditures. They wouldn't pay for anything in and of themselves."

Two mothers who talked to RTV6 Friday said the best option is one that puts more money into the state's schools.

"More money for schools and roads is the better option, because those are growth things that we need," one said. "I mean, we're not getting smaller. Our schools are looking to be more full… We need bigger schools. We need better roads. It's going to help us all out in the long run."

Another said, "I'd want it to go toward our education, especially since the schools have had their funds cut in the past few years."

Lawmakers will likely work out a compromise somewhere between the Pence plan and the Senate's plan.

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