Over the past decade, Indiana lawmakers have worked diligently to simplify and reform our tax system, and based on the 2018 State Business Tax Climate Index, our hard work is paying off.
According to the nonpartisan Tax Foundation, the publisher of the Index, Indiana’s tax climate ranks among the top 10 in the United States. In ninth place, we far outrank neighboring states, with Illinois at 29, Kentucky at 33, Michigan at 12 and Ohio at 45.
To determine rank, the Tax Foundation analyzes states’ tax codes, evaluating 114 variables in five categories, including corporate, individual income, sales, property and unemployment insurance taxes. Indiana’s high ranking is a result of specific legislation passed by the General Assembly over the last few years.
During the 2010 session, lawmakers passed a constitutional amendment, which, with the approval of 72 percent of Hoosier voters, permanently capped property taxes in Indiana. This gave employers a stable fiscal environment for building and expanding operations.
In 2011 and 2014, the General Assembly passed legislation to phase down our corporate income tax rate from 8.5 percent to 4.9 percent by 2022. These laws moved our corporate tax from the middle of the pack nationally to among the lowest rates in the country.
In 2013, legislators approved a five percent individual-income tax cut, which continues to save Hoosier taxpayers hundreds of millions of dollars each year. We also eliminated the state inheritance tax. Prior to the law’s passage, Indiana was one of only eight states to levy a “death tax,” which put a burden on family-owned farms and businesses.
Finally, Indiana enacted nationally recognized legislation, mandating a five-year cyclical review of tax incentives to ensure tax policies had our desired economic impact. This review led to the elimination of under-performing deductions and credits, generating revenue for more effective tax reductions.
These laws have made Indiana’s tax climate both business-friendly and fiscally sound. I am confident our tax system will continue to improve and develop, paving the way for even more employers to locate in Indiana and provide good-paying jobs for Hoosiers.
As always, I welcome your input and questions on this topic or others. My office can be reached by phone at 800-382-9467 or by email at Senator.Long@iga.in.gov.
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