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20 Year Tax Abatements – A Good Idea?

Posted 4:56 PM by

Indiana State Flag on Brick Wall

Things are transpiring fast and furiously at the Indiana State House. One possible spin-off of the current push to overhaul business personal property tax is to provide local governments the authority to award tax abatement up to 20 years. My first inclination when I hear a proposal like this is to consider whether it’s a good idea or a bad idea. I have long believed that the more incentive tools state and local governments have at their disposal to promote economic development, the better. And, in general, I believe property tax abatement, one of the few weapons in every Indiana locality’s deal-making arsenal, needs to be preserved, not placed under a microscope as some have recently suggested.

That said, the notion of 20-year abatement carries with it some unique challenges, including the ability of companies and local governments to crystal ball growth that far out, and to have those extrapolations translate into data that can meaningfully impact decisions. Even so, several states, including Indiana’s neighbor, Ohio, have more robust tax abatement options at their disposal than Indiana currently has on its books.

An expanded abatement option, used in conjunction with Indiana EDGE credits and other IEDC incentives, could be a difference-maker in deals for those communities that decide to allow and employ longer abatements. The question then becomes when and how to use it. As any public official knows, with great power comes great responsibility.

About the Author
Tim Cook is the partner-in-charge of Katz, Sapper & Miller's State and Local Tax Group. Tim assists clients with complex business restructurings, negotiates settlements at both the audit and appeals level, and provides tax advocacy services. He also works closely with companies during the site selection process, helping them make data-driven location decisions while fully leveraging economic incentives. Connect with him on LinkedIn.

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