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How does Indiana rank? Lawmakers discuss state tax policy, revenues

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INDIANAPOLIS (Sept. 15, 2014) - From the things we buy, to the money we earn, there's no avoiding taxes. But when it comes to taxes- how is Indiana doing as a state?

On Monday, a commission of state lawmakers held their first meeting of the summer to discuss the issue of business taxes.

“When you're looking at our property tax scorecard, Indiana does not do bad at all,” said Fred Nicely, an expert with an independent group called COST, or Council on State Taxation. “Indiana is actually the state that has done the best (in the region). It has a B grade and the only state that comes closer is Michigan with a B minus.”

“I'm pleasantly surprised,” said state senator Luke Kenley, R-Noblesville. “It shows that we're a good state for business in terms of a lower taxation.”

But another report issued Monday by Standard & Poor’s claims the state could have a problem with sales tax revenue in the future, if the so-called 'income gap' doesn't narrow. The report points to the fact that Indiana has one of the highest state sales taxes in the nation, though Kenley notes that other states' local governments tack on much higher local taxes too.

“We're in pretty good shape on sales tax,” said Kenley. “I think the question is are the correct things being subjected to tax.”

State Senator Tim Lanane, D-Anderson, issued the following statement about Monday’s report from Standard & Poor’s, which reads in part:

“According to (the report), Indiana’s growing income inequality is negatively affecting the state’s tax revenue. My fellow Democrats in the legislature and I have argued that Indiana’s tax policies have done little to improve the status of working, middle-class Hoosiers and this report has further validated our concerns. Over the course of the last few legislative sessions, we have seen proposals that proponents say are intended to improve business in our state and create jobs. Republican legislators in the General Assembly have focused their priorities on improving Indiana’s business climate by passing the so-called “Right to Work” law and further cutting the state’s corporate tax rates with little proof these policies create the high-paying jobs Hoosiers deserve.”

Earlier this summer, Gov. Mike Pence said that simplifying the state’s tax code could be part of his agenda next year. This past year, lawmakers approved a plan to give local governments the option to phase out the business personal property tax. So what do lawmakers want to do this year?

“I think the focus needs to be on overall tax system and implication for all taxpayers,” said Kenley. “I don't think you can deal only with business personal property tax in this commission and really get your work done. I think we need to look at the whole system for all taxpayers.”

The Commission on Business Personal Property Taxation will meet again on Sept. 29.