Two bills to reduce state income tax heard by key Indiana Senate committee

Both would cut tax to about the level Pence wants

INDIANAPOLIS - Gov. Mike Pence got support for his planned tax cut Tuesday in the Indiana Senate. 

A key committee heard two bills to significantly reduce the state income tax, a key portion of the Pence economic program. 

The Senate Tax and Fiscal Policy Committee heard one bill that exactly matches what Pence wants and another that is very close.

The Pence bill would cut the state individual income tax from 3.4 percent to 3.06 percent over two years.

The other, more gradual bill would reduce the tax to 3 percent in four years.

Small business representatives, whose companies usually pay taxes at the individual rate, said enacting either reduction would spur hiring.

"Absolutely,” said Barbara Quandt of the National Federation of Independent Business, “because they will just automatically plow that back into their businesses, to create jobs, to buy equipment, to expand, which they're not doing right now."

Sponsors said Pence deserves the benefit of the doubt on what is the cornerstone of his economic plan.

"Any time the government takes in more money than it needs to operate, I think it's incumbent upon government to return the remainder back to the taxpayer,” said Sen. Mike Delph, R-Carmel. "So I think that we have already seen through Chris Atkins, the budget director's presentation over in the House, that the governor can afford to pay for this tax cut while also balancing the budget."

But opponents warned that surpluses have been known to disappear in the blink of an eye.

One opponent questioned how the state can say it has a surplus when it owes so much money.

"We have significant debts that the state owes, with pensions that aren't funded, with the money that we owe to the federal government for the unemployment compensation insurance that we've borrowed,” said Sen. Lindel Hume, D-Princeton. “We owe nearly $2 billion to the federal government, and we talk about having a $2 billion surplus. So I think this is not the time for it."

Committee Chairman Brandt Hershman, R-Buck Creek, did not hold a vote on either bill, but he said the hearing allowed both sides to air their views on an issue that almost certainly will be voted on as part of the budget bill when it arrives from the House. 

Meanwhile, that budget bill continued to progress through the House.

The Ways and Means Committee approved the spending plan and forwarded it to the full House for a vote in the next week.


Follow Norman Cox on Twitter: @normancox6

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