(INDIANAPOLIS) – Your taxes and your utility bills would go down under a bill passed by the Indiana House.
The House voted 68-35 to slash taxes by one-point-four-billion dollars. Ways and Means Chairman Tim Brown (R-Crawfordsville) says the bill would cut the income tax rate by a quarter-point over the next four years, and repeal two utility taxes. The combination would save the typical household about $171 a year.
Indiana’s updated economic forecast released last month predicted the state will collect $3 billion dollars more in taxes over the next two years than it was expecting when the state budget was written just nine months ago. Brown says if the state is collecting more from taxpayers than it needs, it has an obligation to give that money back.
Indiana already has an automatic tax rebate when the state surplus rises too high. Taxpayers will receive $125 apiece this year under that law. The bill would make it easier to trigger the rebate, by removing a required transfer to the Teachers’ Retirement Fund, and making you eligible for the rebate even if you don’t owe any taxes.
All but four Democrats voted against the bill, joined by Henryville Republican Thomas Saunders. Democrats say a billion dollars in new money could be spent on a host of priorities, from thousands of new police or addiction counselors to state-funded preschool or textbooks. They argue that would go further to boost long-term economic growth. And Indianapolis Democrat Carey Hamilton warns the bulging surplus has been padded by billions of dollars in federal money from President Biden’s pandemic relief bill.
Brown says the four-year phase-in allows legislators to change course if the gusher of new money dries up. And House Speaker Todd Huston (R-Fishers) says while the state did approve new spending last year for broadband, small businesses, and community development, taxpayers should be allowed to decide for themselves how the new money should be spent.
And Democrats complain the biggest chunk of money in the bill goes to businesses, in the form of a tax break on equipment depreciation rules endorsed by Governor Holcomb in his State of the State address.
Indiana’s income tax rate of 3.23% is already the lowest since a 1987 increase to 3.4%. The proposed new rate of 3% would return the tax to its 1986 level.
The bill faces negotiations with the Senate, which so far has been cautious about changing the tax code before a full budget is written next year. The Senate will take up the bill next month.
