Indiana Tax Study: Competitive Rates, High Property Taxes
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INDIANAPOLIS — The Indiana Chamber of Commerce released a report on the state’s taxes. It shows that Indiana relies heavily on income and sales taxes but keeps business taxes competitive. This first part of the report focuses on how the state’s tax system compares to others.
The chamber conducted the study to compare Indiana with a few states it sees as competitors in economic growth, talent attraction, and investment. They wanted to see how these states make their money, how their tax systems are set up, and how Indiana measures up against them.
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“What we found in this first phase of this study is compared to our competitors, we generate a significant amount of our revenue from sales and income, and compared to these other states, we are in a pretty good competitive position,” David Ober Senior VP, Operations and Finance, Indiana Chamber, told IndyPolitics.
The report also points out that Indiana has trouble with local finances and property taxes.
Ober explains that when you estimate future costs for some businesses, Indiana’s property taxes on buildings and equipment are almost twice as high as in similar states.
“We’re not competitive but for any kind of incentive we’re able to put together to attract capitally intensive industries in the state,” he said. “That’s just what we’re able to attract in through incentives that don’t include folks that have been operating their business in the state for generations and decades who don’t really factor in as far as receiving incentives.
Businesses in Indiana pay a larger share of property taxes than other states but contribute a smaller share to total state and local taxes. In manufacturing, the effective property tax rate is 4.9%, more than double the average of competitor states.
The study’s findings will help inform policymakers as they work on future tax reforms. Phase two of the report will include more detailed recommendations. The goal is to strengthen Indiana’s tax system, support long-term economic growth, and improve the state’s competitiveness.
