House Bill 1002 is the House Republican comprehensive tax proposal. The Chamber gave its enthusiastic support for this bill last week, citing the many important gains to be realized by removing what are among the few remaining blackmarks on our tax code. Here’s why:
It includes the Chamber priority of phasing out the 30% minimum valuation depreciation floor on business personal property by providing that the minimum will not apply to any property purchased after January 1, 2022. To compliment this exemption of new property, the bill provides an income tax credit equal to the property tax on existing business personal property, beginning in 2024. The bill also eliminates what is known as the “double-direct test” currently applied in determining qualification for the sales tax exemption on production/manufacturing inputs. This change specifies that several types of inputs that have been the subject of disputes over the past many years are covered by the exemption. It also repeals the utility receipts tax. The Chamber has advocated for a number of years that this method be used to phase out the 30% depreciation floor. Likewise, the Chamber has worked to eliminate the double-direct test and repeal of the utility receipts tax.
The House bill very thoughtfully addresses each of these items previously identified by the Chamber in a neat, comprehensive package – one sure to promote investment and economic growth across all sectors of the business community. Our efforts over the years appear to be paying off. And on top of these important items, the bill additionally provides relief to businesses that operate as pass-through entities (partnerships/LLCs and sub-chapter S corps) in the form of a reduction of the individual income tax that their owners pay.
Bill Waltz is vice president of taxation & public finance for the Indiana Chamber. He is also an attorney and has been with the organization since 2004.
