Indiana Senate Republican leaders want to eliminate state income tax by end of decade

Indiana Senate Republicans want the state to take a comprehensive look at its tax system – with an eye towards eliminating the income tax by the end of the decade.

Caucus leaders are proposing creation of a high-level commission on taxation.

Senate Tax and Fiscal Policy Committee Chair Travis Holdman (R-Markle) said he wants the panel to undertake a two-year study of the state’s entire tax system.

“If we had the opportunity to start all over again with all of these changes that have happened economically and demographically in the state of Indiana and with our workforce, how would we do things differently than what we have done in the past and we keep doing?” Holdman said.

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Holdman said part of that goal should be eliminating the income tax within five to seven years.

Ball State economist Michael Hicks said that’s not necessarily the right debate. Just looking at tax rates, he said, has never worked to attract economic activity.

Hicks said policymakers must look at taxes as the price you pay for good public services.

“The quality of public services play much more into the decision of households to locate someplace,” Hicks said. “And business decisions are almost exclusively predicated on the human capital supply side that’s available.”

The legislative session begins in January.

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