As Governor Pence and members of the Indiana State legislature continue to tackle the issue of personal property taxes, the Indiana Fiscal Policy Institute recently released a report detailing both major and insignificant impacts of the tax. Specifically, the report claims that taxes on equipment have little effect on decisions for businesses to relocate to other states. On the other hand, phasing out property taxes “could have a larger effect on relocation decisions from county to county within the state,” if local governments are allowed to make their own changes to the law. 

Mayors and local government leaders across Indiana are particularly concerned with whether replacement revenue will be received if the tax is phased out. With potential cuts to vital government-funded services such as police and fire departments, legislative leaders are seeking to avoid what Governor Pence referred to as unduly burdens on local governments. Suggested revenue replacement strategies include reducing the popular Research and Development tax credit, among others.