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Indiana Considers Taxing Current Cash Value of Personal Property

by John O'Neil, Chicago, March 2020

 

A bill making its way through the Indiana General Assembly seeks to change the way personal property taxes are calculated.

 

Rather than being based on acquisition costs, the tax would be assessed on the current cash value of personal property.

 

Senate Bill 385

 

SB 385 was approved in the Senate and sent to the House of Representatives. Sponsor, Senator Aaron Freeman said he thinks the state should change the law to base the tax on the current cash value instead of the acquisition cost because if a business keeps a piece of equipment for years, the value would depreciate, making it more sensible to base it on the current value.

 

According to an analysis by the Legislative Services Agency, the proposed law change could exempt an additional 65,000 businesses from paying the tax. As a result, local tax revenues would be reduced by an estimated $18 million statewide.

 

The proposal comes one year after lawmakers doubled the personal property tax exemption threshold from $20,000 to $40,000. The higher exemption was designed to help businesses that paid small amounts of personal property taxes avoid burdensome filing duties.

 

Pro and Con

 

Proponents of the bill, including the Indiana Chamber of Commerce, the Indiana chapter of the National Federation of Independent Businesses, and the Indiana Manufacturers Association, say it would significantly help small businesses.

 

Opponents, including the Association of Indiana Counites and Accelerating Indiana Municipalities, say the change could lead to more tax appeals. They point out that the current value of personal property can be debated, while the acquisition cost is usually straightforward.