House Republicans:  A New Direction for Indiana

Overview of 2005 House GOP Legislative Agenda

 

 

Creating Jobs and Reviving Indiana’s Economy

 

1)  Hoosier Headquarter Relocation Tax Credit

 

Policy Goal:  To reverse the recent trend of corporate headquarters leaving the state. 

 

Proposal:

  • Fifty percent non-refundable tax credit for reasonable and necessary costs of relocation and investments in buildings, equipment, or other fixed assets.

 

  • To qualify, a relocating corporate headquarters must have at least 250 employees and the company must generate at least $1B in annual revenues.

 

  • Tax credits earned may be accessed over 10 years (any unused credits may be carried forward until they expire after Year 10).

 

  • Tax credits may be applied only to future tax liability attributable to growth in Indiana taxable income.

 

 

2)  Lifelong Learning Accounts (LiLAs)

 

Policy Goal:  Gives all Hoosier employees and employers a tool for job training so they can remain competitive in the 21st Century marketplace.

 

Proposal:  Explore options to allow workers to establish tax-free savings accounts to use for job-related education costs.  Options include a pilot program or using the existing structure of the College Choice 529 Investment Plan.   

 

 

3)  Plan for our Future – Implement the IEDCorporation Transition Plan

 

Policy Goal:  Facilitate a smooth transition of economic development duties to the new Indiana Economic Development Corporation (IEDC).

 

Proposal:  Clarify legislative intent regarding many details of the structure of the new IEDCorporation.  Specific provisions of this legislation were recommended by the IEDCorporation Transition Subcommittee under the Indiana Legislative Council.

 

 

4)  The Competitive Advantage Tax Act

 

Policy Goal: To remove illogical discrepancies in the Indiana tax code which discourage key business investment expenditures. 

 

Proposal:

  • Equity in treatment of R&D Equipment – expand the existing sales tax exemption for manufacturing equipment purchases to include R&D equipment too.

 

  • State-wide expansion of I-69 Corridor Tax Abatement for Logistical Distribution and Information Technology Equipment – allow all counties to offer this incentive that is currently restricted to counties along I-69 from Anderson to Ft. Wayne.

 

  • Expand 20% Venture Capital Tax Credit – Revise cap on tax credit from $10 million/yr to $20 million/yr.  Will encourage investors that provide qualified investment capital to businesses focused on commercialization of research and development, technology transfers or the application of new technology.

 

  • Lower the Depreciation Floor by half– Reduce the current depreciation floor on machinery & equipment to 15% (artificially inflates the value of depreciable equipment for property taxation).

 

  • Streamline the corporate income tax by removing property and payroll factors from the business income apportionment formula and keep sales as the only income apportionment factor.  (Currently, the three factor apportionment formula causes Indiana companies to face a greater income tax burden than their out-of-state competitors).

 

  • Enhance EDGE Tax Credits – Change the wage eligibility threshold to the lesser of the county average wage or the state average wage (current threshold is 105% of the county average wage).  Lower company size threshold to 75 employees (current threshold is 200 employees).

 

 

5)  Indiana Agriculture Enhancement Act

 

Policy Goal:  To provide a cohesive voice and an organized structure, both of which are necessary to full promote and maximize the agricultural sector and its impact on the Indiana economy.

 

Proposal: 

         Create an independent, Cabinet-level Department of Agriculture headed by a Commissioner of Agriculture appointed by the Governor.

 

         Allow the enterprise zone board to designate certain areas as agricultural enterprise zones that provide exemptions from property taxes and the adjusted gross income tax for agricultural processing facilities located in the zones. Note:  Same as HB 1314-2004.

 

 

Controlling Government Spending and Taxation

 

1)  99% Spending Limitation

 

Policy Goal:  To prevent a recurrence of the major budget deficit problems the State is now facing.

 

Proposal: 

  • Restricts annual appropriations to 99% of projected revenue collections.

 

  • Provides an “escape clause” to exceed the limit with 2/3rds majority approval of a supplemental budget bill that includes all excess appropriations.

 

  • Requires that the synopsis of a biennial budget bill (and a supplemental budget bill, if applicable) disclose the ratio of appropriations to projected revenue for each fiscal year of the biennial period.

 

 

2)  Support the Taxpayer Amnesty Program/Daniels Proposal

 

Policy Goal:  Generate revenue to improve the state’s bottomline and provide economic development incentives.

 

Proposal: 

  • Eight week tax amnesty program.

 

  • After amnesty period expires, interest and penalties would be retroactively applied and doubled.

 

 

3)  Property Tax Deferrals for Senior Citizens

 

Policy Goal:  Help senior citizens with limited resources deal with the effects of large property tax increases (particularly due to the 2002 reassessment) without automatically shifting the tax burden on to other property owners.

 

Proposal:  Allow homeowners that are 65+ years old and have experienced a property tax liability increase of more than 65% above their 2002 liability to elect to defer all or part of the “excess” tax liability. 

 

The unpaid liability would then become a lien on the property to be collected when sold.  

 

This eligibility threshold will be raised each year to allow deferrals of any “excess” tax liability increases above 10% per year.

 

For seniors that did not own their current home in 2002, their property tax liability in the first year they own their home will be considered their base year for determining eligibility.  The amount they may be deferred is any “excess” tax liability increases above 10% per year.

 

 

4)  Tax Phase-in on Property Improvements

 

Policy Goal:  End the current system of selective property tax abatements and ease the “shock” of tax increases that currently accompanies new investments in property (home remodeling, plant expansion, etc.).  Increase the long-term rate of growth in property investment and improvement statewide.

 

Proposal: 

  • Phase-in assessed value (AV) increases over three (3) years for construction of new farm/commercial/industrial buildings; expansion of farm/commercial/industrial buildings; investment in new business equipment; and improvements to existing homes.  New home construction and retail property are NOT eligible for this AV phase-in.

 

  • Repeal all existing property tax abatement statutes.