2013-04-30 / Front Page

State Legislators, Pence Agree To Five Percent Income Tax Cut

Budget Package Vote Expected Today From State Senate, House
Staff Report

In the midst of the final full week of the 2013 Indiana General Assembly’s legislative session, Indiana Governor Mike Pence’s administration announced Thursday afternoon that he and state lawmakers have met in the middle for an income tax cut agreement.

Pence touted the phasedin five percent income tax reduction as the largest tax cut in the state’s history. Legislators are expected to vote today, Friday, on the deal that includes eliminating the state’s inheritance tax and unspecified relief for businesses in the Hoosier state.

“Today, Hoosier taxpayers won a great victory,” Pence said. “The agreement reached between our administration and legislative leaders will be the largest state tax cut in Indiana history. The combination of a five percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms.”

The first reduction would be seen on the first paycheck of 2015 when the 3.4 percent individual income tax would drop to 3.3 percent. The second cut would come on January 1, 2017, dropping from 3.3 percent to 3.23 percent.

Indiana District 44 State Representative Jim Baird explained that preliminary highlights of the deal look promising for various needs throughout the state.

“In terms of keeping road funding, we’re going to bump road funding for counties to about $215 million a year in each of the two years. With education, we’re sticking with where we were on K-12 with a two percent increase in 2014 and another one percent in fiscal year 2015,” Baird said. “There will also be funds for performance in there. One other thing that I think is great is that we’re going to pay off some debt for some of our state universities in cash, meaning a huge savings in interest payments, which will give us greater flexibility in years ahead. It’s a good mix and I think everybody is coming together, that’s what makes this process work well. We have various inputs and then we come to that kind of deal... everyone is interested in helping Indiana taxpayers.”

The governor praised the efforts of the state’s Senate and House leaders.

“I am grateful for the leadership of Senate President Pro Tem David Long, Speaker Brian Bosma and other key fiscal leaders for working diligently with our administration to craft this historic package of tax relief,” Pence added. “Their efforts demonstrate the commitment of the General Assembly to put taxpayers first.”

Long reiterated that once fully implemented, the deal will become the single largest tax cut in the state’s history.

“We believe these tax cuts are responsible and will have a positive impact on every Hoosier taxpayer and provide a meaningful boost for the Hoosier economy,” Long said. “I appreciate the hard work of the House and Senate fiscal leaders in putting this tax package together and thank the governor for his willingness to find common ground and embrace a winning tax cut package for all Hoosiers.”

Bosma said the budget proposal to be voted on today reflects goals he and fellow Republicans in the House set to achieve in 2013.

“Our budget meets our goals of prioritizing education and road funding while maintaining strong fiscal reserves. In addition, we integrated a conservative concept for state budgets of paying cash for projects and reducing the state’s debt burden,” Bosma stated. “After meeting each of these goals and with a proven track record of fiscal integrity, we are in a positive fiscal environment to give Hoosiers the largest tax cut in the history of Indiana. This blend of tax relief will have a positive impact on Hoosiers across the state and will result in a tax cut for every Hoosier.”

First-term Indiana District 37 Senator Rodric Bray praised Pence’s leadership in attempting to reduce the tax liability of Hoosiers.

“I think this one is a good compromise to that, it doesn’t give the 10 percent that he wanted, but I think he’s very pleased with it and I think we are too,” Bray said. “I think reducing taxes is a good idea for Hoosier taxpayers, but we also need to make sure there is a certain level of fiscal responsibility as well, and this goes a long way to take care of both of those issues.”

Indiana District 46 State Representative Bob Heaton noted that he and the rest of the statehouse caucus felt compelled to ensure that, as part of the budget deal, money was returned to local governments to repair deteriorating roads.

“When you look at the deal, it’s a combination of a tax relief that will have a positive impact on Hoosiers when you kick in the inheritance tax repeal and additional tax relief for businesses,” Heaton said. “As far as Governor Pence indicating that he is happy with what he got... I shared this with the governor and others – we need to make sure we maintain our roads. We need as much funding as we can get for our county roads and in cities and towns.”

Indiana Chamber of Commerce President & CEO Kevin Brinegar also commented on the budget provisions included in House Bill 1001.

“The new state budget has a strong focus on jobs and economic growth, putting additional investments into education and workforce development while also making important tax cuts,” Brinegar said. “Trimming the individual income tax rate by five percent will not only benefit working Hoosiers but also many of the state’s smallest business owners. It was particularly important to see some K-12 funding restored (cut during the last budget process) and more dollars targeted for our highways and infrastructure system. Meanwhile, the immediate elimination of the inheritance tax is long overdue and will lift a significant burden off of small, family owned businesses. We commend House and Senate leaders, the governor’s office and all those who got the budget to where it is – fiscally sound and including a wide variety of positive provisions for Hoosiers.”

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