Indiana Governor Mike Pence’s proposal to cut the state income tax may have played well on the campaign trail—but it appears to face a rough road ahead in the Indiana General Assembly.
“Let’s be honest with our fellow Hoosiers, we can afford to do this,” said Governor Pence during his State of the State address Tuesday night.
Mike Pence wants to cut Indiana’s 3.4 percent individual income tax rate down to 3.06 percent, but he can’t do it alone.
“Well, this doesn’t seem to be a tax where we aren’t competitive with other states,” said Sen. John Broden, (D) South Bend. “I have joined in bipartisan efforts for example in the past to eliminate the inventory tax. I supported some of the property tax cap measures because it was clear those taxes were having a negative effect.”
Senator Broden would prefer to restore spending cuts made in past sessions, particularly where education is concerned.
“We had a more than $300 million cut in K-12 education, we haven’t been investing an appropriate amount in higher education, we’ve endured cuts as well as reduced spending there, so I would rather see us shore up some of the cuts we have made in the last three or four years to invest in our students to invest in our workers.”
Although Republicans rule the Statehouse with super majorities, some suggest that Pence may have to reach across the aisle to get his tax proposal passed.
“Republicans in the house and senate seem to be the most opposed to it,” said Ind. Rep. Ryan Dvorak, (D) South Bend. “I think that he might be able to work with Democrats on a tax cut that's targeted to help middle class families.”
But Pence primarily sees the cut as a way to boost business. 92 percent of small businesses pay their taxes through the personal income tax rate.
“This reduction in taxes will unleash a half billion dollars into the private voluntary economy every year, letting Hoosiers keep more dollars to spend, invest, or save will be good for Indiana families and businesses,” Pence said during the State of the State.
In 2012, Indiana just awarded each and every income tax payer a $111 tax credit that resulted from high cash reserves. Hoosiers will claim the credit as they fill out their income tax returns in the weeks to come.
“They’re eliminating the inheritance tax, they’ve lowered corporate tax rates the last couple of years, you know, lower taxes is what everyone wants, but we also want a state that’s going to be an economic engine,” said Ind. Rep. David Niezgodski, (D) South Bend. “Obviously, we’d like to see some dollars go back towards education.”