Indiana one step closer to restructured, lower corporate tax rate

INDIANAPOLIS, Inc. — A key House committee this week voted 18-4 in support of State Sen. Brandt Hershman’s job bill fostering the creation of private-sector jobs and promoting economic development by restructuring Indiana’s corporate income tax rate by 20 percent.

Senate Bill 589 lowers Indiana’s corporate income tax rate from 8.5 percent to 6.5 percent and implements recommendations made by last summer’s Interim Study Committee on Economic Development – a bipartisan panel of lawmakers and business leaders who examined ways to improve economic growth statewide.

Hershman, chair of the Senate Committee on Tax and Fiscal Policy and the Interim Study Committee on Economic Development, said Indiana has a relatively low cost of doing business, a great workforce, excellent colleges and universities and comparatively low property and individual income taxes. He said restructuring this rate will help address the one element of Indiana’s tax structure that is out of proportion to the rest.

“This vote by the House Committee on Ways and Means brings our state one step closer to making Indiana the destination of choice for new employers and fostering private-sector job growth,” said Hershman (R-Lafayette). “Indiana is on its way to moving up from tenth-best business tax climate in the nation and recovering from the national recession faster and better than other states by encouraging investment and entrepreneurship.”

Hershman said modernizing the tax structure – one of the highest when compared to other states and seen as a hindrance to job creation – will help the nearly 16,000 small Hoosier companies that are the backbone to economic development. He said small companies provide six in 10 new jobs, with a majority of those positions resulting from start-up companies and new ventures. He emphasized many large corporations are at an advantage because they can find ways to shift their taxes and reduce the amount they pay.

He said provisions the bill help offset potential revenue losses.

SB 589 contains other components to foster economic development in the state:

  • Developing educational programs on entrepreneurship for students and members of the workforce;
  • Determining specific industries in which Indiana has advantages and should emphasize;
  • Finding ways to eliminate or reduce Indiana’s personal property taxes;
  • Requiring state and local economic development organizations to collaborate and report results; and
  • Focusing public universities on turning technology and innovation research into commercial uses.

SB 589 can now move to the full House for consideration.

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