Momentum for Significant Changes to Indiana Taxation

Since 2002, there have been numerous changes to the Indiana tax laws to improve Indiana’s competitiveness, while at the same time implementing cost controls and preserving Indiana’s ability to balance its budget. Notable changes include the elimination of the gross income tax and the supplemental net income tax; the elimination of the inheritance tax; reductions in income tax rates for individuals, corporations and financial institutions; numerous deductions and credits designed to stimulate economic development; and the addition of property tax caps. As a result, various national studies have recognized Indiana’s ability to improve its tax climate while maintaining fiscal discipline. The Tax Foundation in Washington, D.C. recently ranked Indiana’s tax climate the eighth best in the country on its State Business Tax Climate Index.

Indiana, however, isn’t resting on its laurels. On June 24, the Governor hosted the Indiana Tax Competitiveness and Simplification Conference, comprised of a mix of national and local economists and tax practitioners. As its name suggests, this one-day conference was intended to identify and discuss ways in which Indiana could make improvements to its tax laws to enhance Indiana’s competitive positioning and to simplify its tax laws and tax procedures. In September, the state issued its 70-page Tax Competitiveness and Simplification Report.

The Legislature had a similar initiative, but one with a different approach. The Legislature created a “blue ribbon” committee to study Indiana’s business tax structure. Members of the committee were designated governmental leaders and representatives of select interest groups and key organizations (including the Chamber). The committee met three times to hear testimony from national and local groups and individuals, and then concluded with a meeting on November 12 to discuss and approve its findings and recommendations.

The scope of the topics discussed has been extensive. The discussions have included some “big ideas,” such as elimination of the personal property tax, the broadening of the sales tax base to include more services, the elimination of the corporate income tax or the reduction of the sales tax rate if the sales tax base is broadened and the idea of turning Indiana into a forced combination, or unitary, state. Big ideas to eliminate taxes in their entirety, or reduce tax rates, and even many of the less ambitious ideas, raise issues of finding replacement revenues to balance the budget and maintain Indiana’s fiscal discipline. Other ideas, such as broadly taxing services or making Indiana a unitary state, may raise revenue to “fund” other changes, but they raise significant policy questions and potentially undermine Indiana’s goal of being more competitive and simplifying its tax laws.

This should not, however, be written off as an academic exercise. There have been numerous ideas in which there appears to be a consensus of opinion for change. Some are areas in which there is very little or no discernible fiscal cost. Those areas include ways in which tax procedures can be improved and streamlined. There are other areas in which there is a conceptual consensus for change, but the improvements would have revenue implications of varying degrees. An example is simplifying Indiana income tax by reducing the number of “decoupling” adjustments from federal taxable income. For the most part, there is a revenue cost to each decoupling adjustment.

The state’s report indicates that it envisions a “package” which will be revenue neutral. It includes a discussion of over 50 ideas, which does not include all of the ideas discussed at the conference or in the white papers prepared by conference speakers in advance of the conference. Some of the topics discussed in the report are very specific and include recommendations. Those seem the most likely to be presented to the Legislature during the 2015 session. Others topics were discussed in less specific terms and appear to reflect the state’s view that additional analysis and discussion is needed. These topics appear more likely to be presented in future sessions if at all. The Legislative blue ribbon committee made 19 recommendations, with more focus on property tax changes.

This chart identifies some of the topics which have been discussed, as well as possible prospects for change. With the high level of effort this year to identify areas for improvement, there is a genuine opportunity to enhance Indiana’s tax climate and legitimate reason for optimism. On the other hand, a package which contains elements that raise revenue in order for the package to be revenue neutral or the temptation of the state to add or exclude elements in a package which give the state an unfair advantage in dispute resolution, could result in a package which includes provisions reflecting highly questionable tax policy and that hurt Indiana’s competitiveness and create further  omplexity to Indiana’s tax system, the exact opposite of the stated goals from the Governor’s tax conference.

Consequently, cautious optimism might be the best characterization.

While we do not yet know exactly what will be presented to the Legislature in 2015, many changes will likely be proposed and discussed. It could be an exceptionally interesting session.

Mark J. Richards is chairman of the Indiana Chamber Tax Policy Committee and a partner at Ice Miller LLP. 

New IndianaSkills.com Site Improved to Feature Array of Job Opps

The Indiana Chamber of Commerce and its Foundation hope the new version of the IndianaSkills.com database will help alert Hoosiers to the array of job opportunities in demand in their region and statewide.

IndianaSkills.com – developed as resource to help employers, workers and prospective employees – debuted in late 2012 with job supply and demand data for occupations that require more than a high school diploma but less than a four-year degree. Now, job postings for the bachelor degree level and higher are also featured on the web site.

What’s more, the data updates include postings and analysis for all jobs from January 2013 through June 2014. Other additions include a listing of experience required for each job posted and direct links to training providers.

The Indiana Chamber believes workforce, which is embedded in the Outstanding Talent driver of the organization’s Indiana Vision 2025 economic development action plan for the state, remains the biggest challenge to Indiana’s economic prosperity.

“There is a tremendous amount of education and workforce data available through various sources,” explains Amy Marsh, director of college and career readiness initiatives for the Indiana Chamber. “What IndianaSkills.com does is aggregate that information, add in the job postings data and make it easy for job seekers and employers to learn what is taking place in their industry or region of the state.”

Marsh adds that two entries to the site – middle skills (jobs requiring certificates, certifications and associate’s degrees) and all jobs – allow users to search for the data that best meets their needs. In addition to the most in-demand jobs, available information includes average salaries, required skills, training needed and job status/earnings of recent graduates.

Some of the key trends emerging from the update:

  • High numbers of sales jobs (sales representatives, sales managers, retail sales, retail supervisors) available across industry sectors
  • Growing number of information technology positions (computer specialist, software development, software engineer, computer support, network administrator, network engineer) with low supplies of graduates in these fields. The job growth in this sector is especially strong in Central Indiana
  • Tractor-trailer truck driver remains the position with the most job postings – more than 30,000
  • Communications tops the baseline skills needs – listed in more than 168,000 job postings

“Another interesting development is that seven of the top 10 certifications needed by employees are in the health care industry,” Marsh says. “Separately, since higher skilled jobs were added into the database, physician makes the top 10 most in-demand list in several regions, including the Lafayette and Terre Haute areas. Also, treatment planning is new to the list of specialized skills that are sought.”

On the updated site, employers maintain the opportunity to easily download customized job descriptions. They can learn about regional and state occupational trends, wages being paid for similar positions, and the skills and credentials they should be requiring for their open positions. Career development professionals can take advantage of IndianaSkills.com to better guide students on available career options and the training required for those positions.

Indiana Chamber President and CEO Kevin Brinegar: “The Indiana School Counseling Research Review released by the Indiana Chamber Foundation earlier this year clearly identified the need for more effective counseling. IndianaSkills.com is one resource in that effort.

“The Indiana Vision 2025 plan has four drivers, but from day one we’ve identified Outstanding Talent as the most critical need. A tool like IndianaSkills.com that helps match education and training with the skills required in the workplace is part of the solution.”

IndianaSkills.com is a product of the Indiana Chamber Foundation with support from the Joyce Foundation and Lilly Endowment Inc.

Keystone XL Pipeline Defeat Will Likely Be Short-Lived

119744231The Keystone XL Pipeline bill was narrowly defeated Tuesday in the U.S. Senate. Indiana Chamber of Commerce President and CEO Kevin Brinegar offers his thoughts on the policy and the latest activity in Washington:

“Canada is going to continue to develop the oil sands and sell to other nations whether the U.S. allows the Keystone XL Pipeline or not. Whatever the impact that activity has on the environment, the activity is still going to happen. That’s the reality. Continued posturing by the Obama Administration and others amid calls from environmental groups isn’t going to change that.

Other countries are looking out for their energy futures. The U.S. needs to as well. Going forward with the Keystone XL Pipeline is an important part of the mix. It would strengthen and expand our already vital energy relationship with Canada. And sourcing more of our energy from a friendly, North American neighbor will help reduce our reliance on energy resources from less stable areas of the world.

Indiana is fortunate to have two senators – Dan Coats and Joe Donnelly – who understand the pipeline’s importance and have been staunch supporters of the project. It’s too bad the Senate, on the whole, couldn’t get past politics and do the right thing for our nation’s energy security. However, we look forward to early 2015 when this measure seems destined to finally pass the Senate and make its way to the President’s desk.

Background: The proposed Keystone XL project would construct a 1,700 mile pipeline to transport about 800,000 barrels a day of heavy crude oil from tar sand fields in Canada across the central U.S. to refineries on the Gulf Coast.

Job Candidates: Don’t Do These Things in the Interview

87566052CareerBuilder offers some reasonable guidance regarding what may make interviewers put off by some candidates. Read the full post, but it also offers some bizarre things candidates have reportedly done. I personally like: “Applicant acted out a Star Trek role.”

Candidate: “Damn it, Jim! I’m a doctor, not an accountant.”
Interviewer: “Ok, well we’re discussing a CPA position, soooooo…”

Anyway, here’s the strange list:

When asked to share the most outrageous mistakes candidates made during a job interview, employers gave the following real-life examples:

  • Applicant warned the interviewer that she “took too much valium” and didn’t think her interview was indicative of her personality
  • Applicant acted out a Star Trek role
  • Applicant answered a phone call for an interview with a competitor
  • Applicant arrived in a jogging suit because he was going running after the interview
  • Applicant asked for a hug
  • Applicant attempted to secretly record the interview
  • Applicant brought personal photo albums
  • Applicant called himself his own personal hero
  • Applicant checked Facebook during the interview
  • Applicant crashed her car into the building
  • Applicant popped out his teeth when discussing dental benefits
  • Applicant kept her iPod headphones on during the interview
  • Applicant set fire to the interviewer’s newspaper while reading it when the interviewer said “Impress me”
  • Applicant said that he questioned his daughter’s paternity
  • Applicant wanted to know the name and phone number of the receptionist because he really liked her

In the end, know that hiring managers are looking for a new team member and want to find somebody that’s a good fit, and aren’t rooting for you to fail. “Employers want to see confidence and genuine interest in the position. The interview is not only an opportunity to showcase your skills, but also to demonstrate that you’re the type of person people will want to work with,” said Rosemary Haefner, vice president of human resources at CareerBuilder. “Going over common interview questions, researching the company, and practicing with a friend or family member can help you feel more prepared, give you a boost in confidence, and help calm your nerves.”

Water, Water Not Everywhere Any More

TWhen I started writing about water earlier this year as part of the Indiana Chamber’s report on our state’s water resources, I never imagined the topic would be this deep. I’m not drowning, but do feel a little over my head at times on this ever-flowing topic.

The paragraph above makes the point that water puns are almost endless (see, I didn’t say pool, ocean or other aquatic term). But seriously, work is taking place on evolving this year’s study into concrete action steps over the next several years to help ensure Indiana’s resources for the long term.

In Kansas, long term means 50 years. Check out a few of the details (including the last paragraph on why this is so important) from this Topeka Capital-Journal article:

Gov. Sam Brownback opened a water policy conference by unfurling a nearly completed 50-year plan containing dozens of proposals for confronting the state’s obstacles in meeting agricultural irrigation and drinking supply demands.

Salient issues requiring attention involve topsoil pouring into man-made reservoirs in eastern Kansas and depletion of the underground Ogallala Aquifer in western regions of the state. Reservoir dredging and aquifer conservation figure prominently in the blueprint, which also raised the possibility of drawing excess water from the Missouri River to supply Kansas consumers.

Brownback said the water study process initiated one year ago would culminate in strategies specific to regional geography and consumption patterns. Pieces of the solution will be expensive, the governor said, and state laws and regulations must be modified to speed reform.

The document recommends crafting tougher state regulations and enhanced enforcement to hold water-right violators accountable.

“As I look out on the future of Kansas, one of the big things we have to resolve is the issue of water,” he told more than 600 people at the conference. “It’s just one of those key things that we’ve got to address. We’ve got to do it working together.”

A blue-ribbon task force is to be formed to map a “balanced, affordable and sustainable” strategy for paying for water projects financed with local, state and federal funding, the governor said.

An estimated 85 percent of water consumption in Kansas is due to irrigation, officials said.

Jackie McClaskey, secretary of the state Department of Agriculture, said the report would direct state agencies involved in recruiting businesses to focus economic development on entities that value water conservation and reliance on technology that improves water efficiency.

Only the Elephants Might be Upset; No More Peanut Report

7324001You have to start somewhere when it comes to better utilizing taxpayer resources and getting rid of unnecessary government work. But rest assured, there is a long way to go.

Check out this Government Executive recap of some common sense legislation out of Washington:

The House  put the final touches on a widely embraced bill to eliminate or modify 53 useless or outdated agency reports, an effort backed by the White House as a cost-savings measure.

The vote tally of 382-0 was evidence that the only area of disagreement between Republicans and Democrats in both chambers was precisely which reports to target in subjects ranging from the Agriculture Department’s write-up on the number of peanuts planted each year to the Homeland Security Department’s analysis of illegal imports of products made from dog and cat fur.

Though some studies have tagged nearly 300 reports as possibly superfluous, negotiators worked the number down. In June, the Office of Management and Budget identified 74 dubious reports; a Senate bill named 64; and a House bill passed in April listed 79.

“In today’s challenging fiscal environment, Congress must leverage every opportunity to save taxpayer dollars by streamlining or eliminating antiquated reporting requirements that are duplicative, irrelevant or simply ignored,” said Rep. Gerry Connolly, D-Va., a co-sponsor. “While enacting the bipartisan Government Reports Elimination Act may not go as far as we would like, it nevertheless represents precisely the type of pragmatic, good government legislating that a divided Congress should be doing more of.”

Sen. Mark Warner, D-Va., who had introduced a companion version, said, “Hundreds of federal employees spend countless hours producing mountains of these reports each year, and in many cases no one ever reads or even refers to those reports. Surely these agency resources could be targeted to smarter, more productive efforts that will actually provide more direct benefit to customers and taxpayers.”

Sen. Kelly Ayotte, R-N.H., a co-author, cast the final bill as just “a first step toward making government smaller and smarter.” She and Warner introduced another bill that would target another 67 reports.

Harmonizing Music History with Worker Productivity

19188345Technology improvements are generally associated with getting the same amount of productivity with fewer workers. But something called the “quartet effect” – with links back to the lyrics of the Grateful Dead – instead emphasizes enhancing what people do with their time. Governing reports:

In the foreword to David Dodd’s The Complete Annotated Grateful Dead Lyrics, Robert Hunter, the band’s “lyricist in residence,” wrote that the song “Uncle John’s Band” represented “the first lyric I wrote with the aid of that newfangled gadget, the cassette tape recorder. I taped the band playing the arrangement and was able to score lyrics at leisure rather than scratch away hurriedly at rehearsals, waiting for particular sections to come around again.”

What Hunter was describing, of course, was an improvement in productivity resulting from the application of new technology. Productivity is usually measured in terms of the labor cost per unit of production, and in most cases improvement is achieved by using new technology to reduce head count. For instance, a steel mill that once employed 10,000 workers produces the same tonnage with only a thousand employees, bank tellers are replaced by ATMs and elevator operators become a thing of the past. But in Hunter’s application of new technology, no one’s position was eliminated. It’s an example of what has been called “the quartet effect” at work.

When you reduce the head count of a musical quartet, you have not improved its productivity. If what you wanted was the music of a quartet, you have destroyed the product. The technology Hunter employed is the kind that, rather than eliminating jobs, allows existing staff to make better use of their time and gives them the opportunity to create higher-quality products.

How is this relevant to government? For most local governments, public safety constitutes the largest single category of expenditures, typically accounting for about 60 percent of total costs. For states and for some local governments, education is the dominant cost category. But it’s important to remember that within these areas, personnel costs — the salaries and benefits of police officers, firefighters and school teachers — are the real cost drivers. Personnel costs typically represent 80 percent or more of the total cost of a police department, for example. Few would argue that taking cops off the streets or teachers out of classrooms improves productivity.

Many Tax Issues Under Consideration in Indiana

The Indiana Department of Revenue has posted the final report (with recommendations arising) from the Governor’s Tax Conference in June. The 70-page document is very comprehensive and interesting, containing a wide range of suggestions being endorsed by the Pence administration. Much is good, but there are also items that will raise some concern.

If you are a tax professional working for or representing an Indiana company, you need to review this report. It covers so many different subject areas that it is nearly certain that you will have a direct interest in something contained in the report. Whether it be the throw-back rule, personal property tax filings or any number of administrative issues, you will find something in this report to note and track, because some will surely serve as the impetus for legislation in the coming session.

Additionally, the Commission on Personal Property and Business Taxation has now met three times and taken a great volume of studies, presentations and testimony under consideration. The committee has taken on so many issues that the chair, Sen. Brandt Hershman (R-Buck Creek), announced that he has scheduled a meeting for November 12 to give commission members ample opportunity to discuss their final report (which was to be submitted prior to November 1).

It is difficult to guess whether the committee will make many detailed recommendations, but its final report will, in any case, include a great volume of information, data and recommendations from those who participated in the fact-finding exercise. It would be worthwhile to scan these documents presented to the commission to determine the matters that could impact your company. Here again, these matters will likewise almost certainly, in some part, serve as the basis of proposed legislation.

Study Committee Wraps Up Work Share Debate

At the end of August, the Interim Employment and Labor Committee heard testimony on work sharing, which was reported by the Indiana Chamber at that time. Recently, the committee met very briefly and reported its findings, but ultimately failed to issue a supportive recommendation.

Because of the number of committee members absent, it may have been difficult to get a recommendation that work share legislation be passed in 2015. As a result, Rep. David Ober (R – Albion) opted for a more neutral “report finding” and has assured the Indiana Chamber that there will be a work sharing bill filed for the upcoming legislative session.

While disappointed that a recommendation to support work share was not proposed, we are looking forward to once again continuing the debate. The Chamber expects to push forward on this issue, which would be a win for employees, business and state government.

NOTE: A work sharing program would allow employers to maintain a skilled and stable workforce during temporary downturns. Employers could reduce employee hours without layoffs, enabling workers to keep their jobs – which hopefully could be returned to full-time status once economic circumstances improve. The employer continues to provide benefits such as health insurance and retirement plans, while impacted employees are permitted to draw a partial unemployment benefit based upon the reduced hours. 

Have a Taste for Culinary Careers?

23064608Every weekend, I reach for a spoon – a big one – and dig into a pint of Ben and Jerry’s Chunky Monkey ice cream. Delectable chocolate chunks. Crunchy walnuts mixed with bananas. It’s one of my favorite indulgences. But that doesn’t mean I want to be a primal ice cream therapist.

Haven’t heard of it? Neither had I until I saw Delish’s list of the 10 coolest food jobs (no pun intended)!

Check out this description:

Ben & Jerry’s Primal ice cream therapist (yes, that’s his real title!), Peter Lind, consumes four to five pints of ice cream in an average week (roughly 15 to 25 flavors per day). The purpose of this madness? To assure Ben & Jerry’s delivers the best-tasting product possible. Peter and his team dream up, then sample and adjust flavors over and over until they are completely satisfied. “You could make a chipotle ice cream, but exactly how hot should it be?” That’s the kind of creamy conundrum the gurus must figure out.

Crave adventure? Become a chocolate explorer:

Biting into a bar of chocolate, it’s hard to comprehend the journey those cocoa beans travel to get to your taste buds. Meet Ray Major, Scharffen Berger’s resident “cacao hunter.” It’s his job to source the best possible cacao for the company’s artisan chocolates. His work has taken him around the world to Nicaragua, Belgium, Ghana, Mexico, Brazil, Bolivia, Guatemala … the list goes on. On these adventures, Major and his team visit plantations to evaluate the trees, discuss the crops, sample the pulp and study the quality of beans.

Food lovers also may enjoy careers as celeb chef assistants, restaurant publicists, gourmet food buyers or beekeepers – just to name a few. And getting paid for what you love to do? That’s icing on the cake.