Why? Because one of four Indiana taxpayers claims itemized deductions on their federal tax returns, and can write off the state and local income tax payments they make. By lowering their state tax bill, the Pence tax rate cut would raise their federal tax bill.
The Pence tax rate cut would take more $770 million out of state revenues over the next two years.
That’s money that the fiscally conservative Republican leaders in the House want to spend making what they call “strategic investments” to bolster the Indiana economy.
The budget plan that GOP House leaders rolled out last Friday would direct most of those dollars back to local schools and state universities that took a hit in the budget-cutting years and back to local municipalities for repair of their crumbling roads and bridges.
The Republicans who control the Statehouse are having an interesting intra-party fight and so far, Pence seems to be on the losing side. The Republican budget-makers in the Senate seem as unconvinced of the merits of the Pence tax rate cut plan as their brethren in the House.
The Statehouse politics of it are intriguing, especially since Pence’s possible presidential aspirations are thrown into the mix. But likely not so entertaining for many Hoosiers, living in a state with an unemployment rate higher than the national average, who are still hoping and praying for something good to jolt the economy.