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State's Individual, Business Tax Climates Differ Heavily

By Brandon Smith

Posted April 16, 2014

According to the nonpartisan Tax Foundation, Wednesday April 16 is Tax Freedom Day for Indiana, the date when the amount of money Hoosiers earn equals the amount of their total tax bill for the year.

Despite recent praise for its business tax climate, Indiana's tax burden for the average Hoosiers is middle-of-the-pack.

The Tax Foundation takes into account income and federal, state and local taxes when determining Tax Freedom Day.

Indiana's per capita income ranks 39 in the country, while its tax burden on its residents puts it at 22. That's despite a business tax climate in the top 10.

Governor Mike Pence says Hoosiers' tax burden will be lightened by a personal income tax cut that kicks in in 2015. He says that cut serves a dual purpose.

"Many businesses simply file their taxes as individuals – small businesses in Indiana," Pence says. "So the most effective way to lower taxes on small businesses, which often times are our top job creators, is to lower the personal income tax rate."

House Ways and Means Chair Tim Brown says helping businesses is important because job creation is one part of the formula for lowering the tax burden.

"We need to expand wages, so I'm very happy to get a jet engine production facility that will have high wage jobs," Brown says. "As we rage the wages, the burden becomes less."

Pence says completely eliminating the state's inheritance tax last year was also a step towards helping ease the burden on individuals.

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