Lawmakers counter Governor Pence’s tax cut plan with new alternative

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There is a new idea being added to the debate over Governor Mike Pence’s tax cut proposal.

One state lawmaker, Rep. Eric Turner, R-Marion, has proposed legislation which would repeal the tax rebates put in place by Governor Mitch Daniels.Those tax rebates kick in this year, automatically, as they are designed to do every time the state surplus hits 12.5 percent.

Because of the state’s budget surplus, Hoosiers will see an extra $111 in their state income tax refund, $222 for couples.

“That’s more money in my pocket, and it’s always a good thing to have more money,” said Brian Niehaus, who was having his taxes done Thursday.

Niehaus said he wasn’t sure about the idea to shelve the tax rebate in favor of the Governor’s tax cut plan.

“My personal preference is to get it at the end, because then it’s all there in one sum for you,” he said.

But Rep. Turner disagrees.

“I think it’s better that we not tax people in the first place, than to bring it all in to state government, then return it to them,” Turner said.

Rep. Turner said he believed his proposal, House Bill 1541, could serve as a means of compromise, since legislators in the Governor’s own party have questioned the sustainability of Pence’s tax cut plan.

“It’s offered in that spirit,” Turner said. “With the Governor’s help, maybe we can get it through and put more money back into Hoosiers’ pockets.”

Late Thursday, the governor’s office released the following statement to Fox59:

“Governor Pence believes that we can retain the automatic tax rebate and also cut the personal income tax by 10 percent.”

So what would it mean for you? It depends on how much money you make.

Pence’s plan to cut the state income tax rate to 3.06 percent from 3.4 percent would mean a savings of about $200 a year, for someone making around $50,000-$60,000 annually, according to John Striewe, founder and president of Fiscal Tax Company in Indianapolis.

“You would hardly notice it,” said Striewe, who supports the idea of a tax cut.

“I think the Governor has made a strong case for the tax cut,” said Rep. Turner. “It (would) put $500 million back into Hoosiers’ pockets.”

The tax cuts would be phased in over a three-year period under Rep. Turner’s plan.

The governor had called for a two-year phase-in period.

Indiana Democrats said it was possible Turner’s bill would lead to compromise.

“Maybe it sweetens that deal a little bit more,” said Senate Minority Leader Tim Lanane, D-Anderson. “I’m not so sure.”

Still, some Democrats feel the tax cut plan would do more to help the wealthy than it would the middle class.

“If we’re going to do some tax relief, perhaps we need to target middle class taxpayers,” said Sen. Lanane.

Rep. Turner’s bill would also phase out the inheritance tax in five years’ time. The bill was introduced earlier this week, and was referred to the House Ways and Means committee for its consideration.

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