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Will Indiana Do Away with PP Taxes?

by Randy Davis, Dallas, December 2013

 

Several Midwestern states including Minnesota, Ohio, and Illinois have eliminated personal property taxes and Michigan has begun the process to do away with the tax. To stay competitive, Indiana may follow their lead.

 

At a legislative preview luncheon, both the House Speaker and President of the Senate said the personal property tax is one of the few hindrances still in the way of making Indiana more attractive to new business.

 

Not a New Idea

 

The proposal to eliminate personal property taxes paid by businesses is not a new idea in Indiana. A similar proposal failed in the last legislative session. But there may be new momentum for its passage in the coming year.

 

The Indiana Chamber of Commerce supports the plan. Indiana Chamber president Kevin Brinegar says the tax puts Indiana at an economic disadvantage. "It's a remaining black mark on our tax climate - an area where we simply can't compete," he said.

 

Replacement Revenue is Key

 

Personal property taxes on business machinery, computers, furniture, and equipment bring in almost $1 billion a year to local governments and schools in Indiana. In some communities, personal property taxes account for more than 30% of the local revenue stream.

 

Senate Minority Leader Tim Lanane said it's critical to come up with a plan to replace any lost tax revenue. "To me, it's irresponsible to just say we're going to abolish another revenue stream without looking at the impact on local government services," he explained.

 

New legislation is currently being crafted to repeal Indiana's personal property taxes without putting undue pressure on local tax jurisdictions. The Indiana General Assembly is scheduled to open its 2014 session on January 7th.