As House Omits Tax Cut From Budget, Senate Panel Considers One
Cut is slightly larger than Pence's but would be phased in over four years
With the House putting off discussion of a proposed income-tax cut, the Senate is diving into the debate instead.
A Senate committee Wednesday took up a tax cut authored by Kokomo Republican Jim Buck. Buck's proposal differs slightly from Governor Pence's call for a 10% cut. Instead of the two-year phase-in Pence proposes, Buck would phase the cut in over four years. He says that would give legislators a chance to halt the tax cut if the economy sputters -- or speed it up if Indiana takes in more money than expected.
And while Pence picked a round number for the size of the cut, Buck picked a round number as its endpoint. His bill would slice a tenth of a point off the tax rate each year, to wind up at an even 3% tax rate. That makes the cut slightly larger than Pence's, at 11.8%.
Pence says he won't stop pressing for a tax cut -- he and Buck point out that neighboring Ohio is among the states considering tax cuts, with others having passed them already. Pence argues the state needs to follow suit to remain competitive, and says he's disappointed House Republicans declined to include it in their budget.
Ways and Means Chairman Tim Brown (R-Crawfordsville) says there will be time to consider a tax cut after an updated economic forecast in April gives legislators a more precise idea of how much money they have to work with. Buck says it's important to demonstrate to Hoosiers now that a tax cut is part of lawmakers' deliberations.
The House budget does include a tax cut -- it speeds up the elimination of the inheritance tax. Brown projects an 11.9% surplus at the end of the two-year budget, just short of the level that would trigger an automatic tax rebate. The state would have to finish the two years with $238 million more than expected to hit the rebate threshold.
The Senate Tax and Fiscal Policy Committee didn't vote, but the cut could still be incorporated into the budget or anoher bill if the panel doesn't meet again before Thursday's deadline.