Lawmakers considering possible tax credit cuts
INDIANAPOLIS — Indiana lawmakers are about to consider a proposal to eliminate several tax deductions and credits, on the urging of Republican Gov. Mike Pence.
One bill scheduled for a House Ways and Means Committee hearing on Wednesday proposes ending 29 income tax breaks to help pay for tax changes that would benefit businesses.
The proposal, sponsored by Rep. Todd Huston, R-Fishers, would eliminate credits that cost the state about $21 million a year, The Journal Gazette reported.
“The goal is to simplify taxes and keep it revenue neutral,” Huston said. “We want to honor that commitment and streamline efficiency.”
The largest of the deductions targeted for elimination is the Indiana college contribution credit, which allows up to a $200 credit to joint tax return filers for contributions to state universities or colleges.
A recent Indiana Income Tax Study found that some 87,000 individuals claimed the credit in 2011. Eliminating the credit would save the state about $8.7 million a year, according to the nonpartisan Legislative Services Agency.
“I personally utilize that tax credit for both Purdue and IU every year,” Republican House Speaker Brian Bosma said. “I think it’s a positive item. I’d have to think long and hard about the elimination of that.”
Huston said that college tax credit will gain the most attention and “we’ll have an honest discussion” about whether it provides the state with an $8 million economic benefit.
The bill would not affect the much more popular tax credit for college savings plans.
Huston’s proposal would also broaden an exemption from the state’s 7 percent sales tax on equipment purchases by manufacturers.
Chris Atkins, director of the governor’s Office of Management and Budget, said the state Department of Revenue spends much time working with businesses on whether they must now pay the sales tax because the current exemption standard is to administer.