August 27, 2012

Most of Indiana Tax Rate Cut Would Flow to Upper-Income Taxpayers


Alternative Could Provide Larger Tax Cuts for Most Hoosiers

Indiana gubernatorial candidate, and current U.S. Representative, Mike Pence recently unveiled his plan to cut the state’s flat personal income tax rate from 3.4 percent to 3.06 percent, should he be elected governor. Pence described the plan as an “across the board” tax cut for “every Hoosier.” But a new analysis performed using the ITEP Microsimulation Tax Model shows that some Hoosiers would see no benefit from the plan, and that the majority of the plan’s benefits would flow to the highest-income Indiana taxpayers. Moreover, ITEP’s analysis shows that if lawmakers insist on prioritizing an income tax cut over other budgetary options, there is a better alternative: raising the state’s long-stagnant personal exemption would provide larger tax cuts to most Indiana residents, at the same cost to the state as Rep. Pence’s proposed rate cut.

Read the Full Report (PDF)