Indiana Senate Republicans want to eliminate state income tax

[Muda69]

https://www.indystar.com/story/news/politics/2023/01/10/indiana-senate-republicans-eliminate-state-income-tax/69791227007/

(Note: Story is behind a paywall)

Quote

When the Republicans in Indiana's Senate laid out their goals for the legislative session that started Monday, one of the most ambitious wasn't something they can do this year, or even the next. Instead, they want to take the next two to see if, and how, Indiana can eventually eliminate its personal income tax.

"As we look to our long-term future, I think the goal for Indiana should be to totally eliminate individual income tax rates in the years to come," Sen. Travis Holdman, R-Markle said Monday.

Holdman is sponsoring Senate Bill 3, one of eight "priority bills" that Senate Republicans will focus on getting passed over the next four months. It would create a new commission, made up primarily of lawmakers, charged with studying the state's current tax climate. In addition to looking for ways to eliminate the state's personal income tax, the commission would also examine the state's unfunded pension liabilities, debt obligations, property tax structure and overall financial position.

It would not, Holdman said, impact local income taxes that vary by county.

Should the bill pass, the commission would meet over the next two years with the goal of delivering findings and recommendations to the legislature by Dec. 1, 2024 — just in advance of the state's next two-year budget writing session.

...

I will be contacting my newly elected representative in the Indiana State Legislature to voice my support of this bill.  I suggest all other Hoosiers do the same.

[Impartial_Observer]

They have a veto proof majority put up or shut up!

[Bobref]

On 1/10/2023 at 7:06 AM, Muda69 said:

https://www.indystar.com/story/news/politics/2023/01/10/indiana-senate-republicans-eliminate-state-income-tax/69791227007/

(Note: Story is behind a paywall)

I will be contacting my newly elected representative in the Indiana State Legislature to voice my support of this bill.  I suggest all other Hoosiers do the same.

And I suggest before you decide to support this bill, you find out where the revenue is going to come from to replace those funds. Sales tax? Right now Indiana is in the middle of the pack nationally when it comes to sales tax. Any increase will push Indiana to the side where it taxes sales at a higher rate than most other states. How about property taxes? Indiana currently has a cap on property taxes. That will change if there’s no income tax money. Does this extend to corporate income taxes? Or just individuals, i.e., voters?

The state income tax burden on Hoosiers is not great … until you also add in the counties’ income taxes. Are those going away?

The fact is, a tax policy should be comprehensive, balancing the fiscal burden imposed by all taxes on the economy. Elimination of the state income tax without addressing these other concerns is simply pandering to the voters with fool’s gold.

The Republicans purport to address those concerns with the study commission this legislation establishes. They will find out that taxes are like playing Whack-A-Mole. Knock one tax down, and another pops up. There can be no meaningful reduction in overall tax burden without either cutting government services, performing them more efficiently, or both. The former is politically unacceptable. The latter is practically undoable. Be interesting to see what this commission recommends. 

Edited January 12, 2023 by Bobref

[Muda69]

1 hour ago, Bobref said:

And I suggest before you decide to support this bill, you find out where the revenue is going to come from to replace those funds.

From a further revamp of the state tax code into something akin to what is being floated in the U.S. Congress, the Fair Tax:  https://reason.com/2023/01/11/house-republicans-want-a-vote-on-the-fairtax-is-it-worth-supporting/

Quote

When Rep. Kevin McCarthy (R–Calif.) finally secured the votes necessary to become the next House speaker, it required concessions to dissenters within his party. Members of the House Freedom Caucus demanded, among other things, a vote on the Fair Tax Act, which has been introduced in the current session.

The Fair Tax Act, while likely doomed by a Democratic Senate and White House, represents the first serious challenge to the American tax code in recent memory. Versions of the act have been proposed since at least 1999. While it has never been voted on in the House, it has been endorsed by multiple Republican presidential candidates and Libertarian presidential candidate Gary Johnson.

The bill would overhaul the nation's entire tax code, scrapping all federal taxes in favor of the FairTax, a 23 percent national retail sales tax. Proponents argue that the 23 percent number is comparable to a 15 percent income tax plus the 7.65 percent payroll tax rate employers pay. In return, taxpayers would keep every cent of their paychecks and only pay taxes on the money they spend.

That shift would have major and immediate consequences. Annual tax returns and W-2s would cease to exist. People who make their money on the black market would be taxed at the same rate as anyone else. The enormous compliance costs currently associated with filing one's annual taxes would be cut significantly. With only one tax and no deductions, the entire process of funding the government would be more precise and transparent.

There are also tradeoffs. For one, around 40 percent of American households currently pay no federal income taxes, most of whom are in the bottom two-fifths of income earners. Under a FairTax system, those households would marginally increase their take-home pay but take it on the chin at the grocery store.

To account for the regressive structure of a pure consumption tax, the Fair Tax Act provides for a monthly stipend, which supporters call a "prebate." All Americans living under the federal poverty line would receive a "sales tax rebate" to offset their monthly tax liability.

...

 

[swordfish]

1 hour ago, Bobref said:

And I suggest before you decide to support this bill, you find out where the revenue is going to come from to replace those funds. Sales tax? Right now Indiana is in the middle of the pack nationally when it comes to sales tax. Any increase will push Indiana to the side where it taxes sales at a higher rate than most other states. How about property taxes? Indiana currently has a cap on property taxes. That will change if there’s no income tax money. Does this extend to corporate income taxes? Or just individuals, i.e., voters?

The state income tax burden on Hoosiers is not great … until you also add in the counties’ income taxes. Are those going away?

The fact is, a tax policy should be comprehensive, balancing the fiscal burden imposed by all taxes on the economy. Elimination of the state income tax without addressing these other concerns is simply pandering to the voters with fool’s gold.

The Republicans purport to address those concerns with the study commission this legislation establishes. They will find out that taxes are like playing Whack-A-Mole. Knock one tax down, and another pops up. There can be no meaningful reduction in overall tax burden without either cutting government services, performing them more efficiently, or both. The former is politically unacceptable. The latter is practically undoable. Be interesting to see what this commission recommends. 

It would create a new commission, made up primarily of lawmakers, charged with studying the state's current tax climate. In addition to looking for ways to eliminate the state's personal income tax, the commission would also examine the state's unfunded pension liabilities, debt obligations, property tax structure and overall financial position.

It would not, Holdman said, impact local income taxes that vary by county.

Should the bill pass, the commission would meet over the next two years with the goal of delivering findings and recommendations to the legislature by Dec. 1, 2024 — just in advance of the state's next two-year budget writing session.

(Not just a unilateral effort to eliminate it, but a commission to test the validity of such an idea and whether a form of it could be implemented - why wouldn't a taxpayer want this?)

[Impartial_Observer]

3 hours ago, Bobref said:

And I suggest before you decide to support this bill, you find out where the revenue is going to come from to replace those funds. Sales tax? Right now Indiana is in the middle of the pack nationally when it comes to sales tax. Any increase will push Indiana to the side where it taxes sales at a higher rate than most other states. How about property taxes? Indiana currently has a cap on property taxes. That will change if there’s no income tax money. Does this extend to corporate income taxes? Or just individuals, i.e., voters?

The state income tax burden on Hoosiers is not great … until you also add in the counties’ income taxes. Are those going away?

The fact is, a tax policy should be comprehensive, balancing the fiscal burden imposed by all taxes on the economy. Elimination of the state income tax without addressing these other concerns is simply pandering to the voters with fool’s gold.

The Republicans purport to address those concerns with the study commission this legislation establishes. They will find out that taxes are like playing Whack-A-Mole. Knock one tax down, and another pops up. There can be no meaningful reduction in overall tax burden without either cutting government services, performing them more efficiently, or both. The former is politically unacceptable. The latter is practically undoable. Be interesting to see what this commission recommends. 

The Republican Party is too dysfunctional to even fathom the unintended consequences, hence my earlier comment. This is political theater and a non-starter. They’re too busy worrying about state sandwiches and ram rodding abortion law down everyone’s throat and none of it does jack shit for Hoosiers. 

Edited January 12, 2023 by Impartial_Observer