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INDIANAPOLIS — Hoosiers soon may see a permanent reduction in their state income taxes on top of the estimated $170 per filer automatic refund set to be distributed to Indiana taxpayers next year.

House Speaker Todd Huston, R-Fishers, revealed Monday that House Republicans are considering a variety of tax reduction proposals for possible enactment during the 2022 General Assembly that convenes Tuesday for a one-day ceremonial meeting to formally organize the House and Senate.

Huston told state business and political leaders attending an Indiana Chamber of Commerce luncheon that a specific tax cut plan has not yet been decided on by the House GOP caucus. But he pledged tax cuts will at the top of his agenda when the Republican-controlled Legislature begins meeting daily at the Statehouse next year from early January until mid-March.

"I certainly intend to make sure, in one way or another, we are giving back to people the money that they deserve, that they've earned," Huston said. "That is a huge priority goal for me, and, I believe, for our caucus."

Huston said the tax policies under consideration include possibly reducing the 3.23% flat state income rate to an unspecified lower rate. He also is eyeing potentially increasing the $1,000 per person income tax exemption, or earnings not subject to tax; an amount that has not changed, or been updated for inflation, in decades.

In addition, Huston said he supports an Indiana Chamber of Commerce goal of further reducing the state's business personal property tax by phasing out the 30% depreciation floor to spur investment in new manufacturing and other business equipment — so long as the business tax revenue, which largely is distributed to schools and local governments, is replaced by other funds.

"I'm not looking to be imprudent. I'm not looking to be irrational," Huston said. "We will, obviously, maintain enough of a reserve to support good state business, and the types of services that people expect."

Huston said Indiana can afford to reduce taxes now because state revenue is coming in well above forecast levels to the tune of $564.8 million in unanticipated tax receipts just between July and October.

That follows a record-setting revenue surge at the close of the 2021 budget year on June 30 that triggered a $545 million automatic taxpayer refund and a $545 million additional deposit in the state's pension funds.

Moreover, Huston said the 2022-23 state budget allocated an additional $600 million to Indiana's pay-as-you-go pre-1996 teacher pension fund, along with boosting school funding and investing billions of dollars in state infrastructure projects — all of which he said will free up additional funds in future years and permit a tax cut as soon as next year.

"My biggest fear is if we keep it, we'll spend it," Huston said.

The tax reduction is far from a done deal, however. Senate Republicans do not share the same enthusiasm as Huston and generally would prefer to wait until the Legislature's 2023 biennial budget session before considering significant tax reductions, just in case the current state revenue growth merely is a temporary product of the various federal economic stimulus programs.

"We're not looking at cutting taxes at this point," said state Sen. Mark Messmer, R-Jasper, Senate Republican floor leader. "(We must) proceed with extreme caution."

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State Rep. Terri Austin, D-Anderson, the House Democratic caucus chairwoman, also was skeptical. She suggested any potential tax cut revenue probably could be put to better use by expanding the availability of affordable child care services to help more Hoosiers, particularly women, return to the workforce following the COVID-19 pandemic.

At the same time, Senate Democratic Leader Greg Taylor, D-Indianapolis, said one way to potentially replace the local government and school funding that would be lost through a business personal property tax cut would be legalize and tax marijuana use, which he said will be a top priority for Senate Democrats next year.

Other issues the legislative leaders said they expect to tackle include deciding how to respond to federal COVID-19 vaccination or testing requirements for most workers, identifying ways to grow and train the Hoosier workforce generally, crafting clean energy development rules, and identifying tools to keep more Hoosiers in the state and attract new residents to Indiana.

In the end, all agreed the scheduled 10-week legislative session won't leave much time to devise new policy proposals on the fly. They said the 100 state representatives and 50 state senators will need to have their plans well in shape by January if they hope to see Republican Gov. Eric Holcomb sign their ideas into law come March.

"We're going to get in, get our work done, and try to move aggressively," Huston said. "My expectation is all our committee chairs are going to be judicious in what they hear, and we'll have a short and productive session."

This article originally ran on nwitimes.com.

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