We take great pride in helping to educate our members and customers through our many publications. The latest example is the newest edition of the Indiana Taxation Handbook, a valuable resource for those who deal with Indiana tax issues.
As a result of changes in tax law and policy over the last two legislative sessions, new and revised sections of the Indiana Tax Handbook: 2013-14 Edition include:
Elimination of the Indiana Inheritance Tax
Reduction in the Indiana Corporate Income Tax
New consolidated filing options for Indiana businesses
Overview of the new rolling reassessments for real property in Indiana
Adjustments to the property tax appeals process, and new obstacles that must be overcome in appealing property tax assessments
Impact of the automatic taxpayer refunds, and where Indiana taxpayers will receive savings
This informative publication is authored by attorneys at Ice Miller, LLP and is available for $111.75 for Indiana Chamber members and $149 for non-members. Order your copy today by calling (800) 824-6885 or through our web site.
Chamber President Kevin Brinegar offers a two-minute wrap-up of the 2013 legislative session. Highlighting his review are thoughts on the new budget, tax relief and critical education and workforce development issues.
We asked a few weeks ago for your opinion about Gov. Pence's income tax cut proposal and where state legislators would end up in their budget. A 5% cut divided between 2015 (3%) and 2017 (additional 2%) was not one of the options.
I guess that would fall under what was choice D (other), which received 3% of the vote. The other choices were:
Full 10% cut as proposed by Pence: 43%
3% cut per the bill passed by the Senate: 27%
No tax cut, which was part of the House bill: 27%
Lawmakers have termed the overall budget as the largest tax cut ($1 billion) in the state's history. The Indiana Chamber's upcoming legislative analysis will have more details, but that does include an immediate elimination of the state inheritance tax (in fact, it makes the elimination retroactive to January 1, 2013) instead of the nine-year phase-out that was passed in 2012.
The budget, as always, was a high-profile issue but just one of the topics that garnered attention. Again, more Chamber review is on the way but our new poll question asks for your overall grade of the 2013 General Assembly. Cast your vote at the top right of this page.
Earlier today, Indiana House Speaker Brian Bosma and Indiana Senate President David Long announced a deal had been reached on House Bill 1001, the two-year state budget. Indiana Chamber of Commerce President and CEO Kevin Brinegar reacts to the budget provisions:
"The new state budget has a strong focus on jobs and economic growth, putting additional investments into education and workforce development while also making important tax cuts.
"Trimming the individual income tax rate by 5% will not only benefit working Hoosiers but also many of the state's smallest business owners.
"It was particularly important to see some K-12 funding restored (cut during the last budget process) and more dollars targeted for our highways and infrastructure system.
"Meanwhile, the immediate elimination of the inheritance tax is long overdue and will lift a significant burden off of small, family-owned businesses.
"We commend House and Senate leaders, the governor's office and all those who got the budget to where it is — fiscally sound and including a wide variety of positive provisions for Hoosiers."
State budget watchers have been talking about the April update of the revenue forecast for months. This is because everyone knew that the numbers that came out this week revising the December projections for state tax receipts over the next two-plus years would be the numbers that control the final form of the FY 2014-FY 2015 biennium budget. While the significance of the April update is not to be diminished, the reality is that many of the “down in the weeds” budget crafters are the same people that generate the forecast. The Revenue Forecast Committee includes fiscal analysts from each of the four caucuses and a representative from the state budget agency – and these people are the ones that the fiscal leaders work with to put the budget together. So this means the folks who have been doing the hands-on budget detail work had a pretty good idea of what the April numbers would be earlier than when they were publically presented on Tuesday. But they couldn’t really generate revised numbers until they had enough indication of what the overall economic forecast would be. It is those trends and indicators that serve as the basis for the group’s revenue projections. The economic forecast (or outlook as they call it) is performed by IHS Global Insights (the largest and most renowned
economics organization in the world).
The revenue forecasters apply economic variables to their formula guided by IHS Global Insight’s economic forecast/outlook for Indiana. The group’s presentation this week indicated continuation of a stable but slow recovery, a slight slowing of consumer spending and higher nonwage income. In response to the economic picture, the revenue forecasters made some modifications to their revenue forecasting model and also made an adjustment to the gaming tax projections to account for more out-of state-competition. The resulting bottom line was an upward revision of $290 million over the previous forecast for the balance of FY 2013 (+$33M), FY 2014(+73M) and FY 2015 (+$184M). Nearly all of the increase is attributable to projected individual income tax receipts in the next biennium. The individual income tax projections were increased by 3% and 4% for FY 2014 and FY 2015 respectively. This translates to $70 million and $151 million more than the December forecast.
The forecast’s show of strength in personal income growth could itself become the subject of debate in the budget negotiations since it can be argued two different ways. Those supporting a tax cut will point to it as evidence that the state is collecting too much in this particular category of revenue, while those cautioning against a cut will suggest that this demonstrates the volatility and uncertainty of a steady income stream. Will the forecasts cause the House budget-makers and the Senate budgetmakers to change their thinking and reconsider the tax cuts? Perhaps, but consider that $290 million is only 1% of the total budget and is really nothing more than an adjustment of a prior estimate.
However you want to view it, it is a positive upswing and that fact alone should help the Governor’s cause for the individual income tax rate reduction.
I'll risk showing my age by asking how many remember the advertising phrase: "How many licks does it take to get to the Tootsie Roll center of a Tootsie Pop?" The ads on U.S. television go back to 1970.
I was somehow reminded of that when reading a recent headline that said: "How many clicks does it take to get to state tax information online?" Not quite as exciting or tasty a subject, but there is that alliteration.
The Tax Foundation asked the second question. Indiana was one of five states at the bottom of that list, requiring five clicks in order for a visitor to the state web site to find 2012 individual income tax rates. Three states (Colorado, Massachusetts and Pennsylvania) provided access with only two clicks.
A second query focused more on quantity of information rather than ease of locating. States were evaluated on the availability of 2012 and 2013 tax rate schedules, tax tables and tax forms. Five states had a perfect six score; Indiana was one of 11 with a five out of six.
What does it all mean? One takeaway is that states would be well served to reduce taxpayer frustration at an already frustrating time for many by making tax information available in an easy-to-locate manner. And, anytime you can pull out a 43-year-old Tootsie Pop reference, you have to take advantage of it.
Indiana Chamber President Kevin Brinegar sat down with Inside INdiana Business recently to discuss the most pressing topics in the state legislature as the end of session nears. See the video on IIB:
A bill that would create a tax district to fund upgrades at the Indianapolis Motor Speedway continues to make its way through the legislature. Some lawmakers want to add guarantees that would protect state funds if the facility would be sold. In this week's INside the Statehouse segment, Indiana Chamber of Commerce President Kevin Brinegar says he's "cautiously optimistic" the legislation will pass.
Our partners at Network Indiana/WIBC report a proposed amendment to the bill calls for the speedway to receive a portion of the money the horse racing industry now receives as a loan, rather than forming a tax district. The chance would also give an additional $5 million to the Indiana Economic Development Corp. for other motorsports industry efforts.
Brinegar says the Indiana House and Senate are not too far apart on a two-year state budget. He believes the final product will look closest to the Senate's proposal, which passed through committee last week. That plan includes a smaller individual income tax cut than the 10 percent proposed by Governor Mike Pence and an increase in K-12 funding by more than $330 million. Pence has called the proposal "a good start."
Differences also remain on education issues. The Senate has passed a bill that would halt the implementation of Common Core standards. House Education Committee Chairman Bob Behning (R-91) has refused to hear the bill because he believes the standards should move forward.
Few will argue with the idea that federal government spending is out of control. The Heritage Foundation's Federal Spending by the Numbers is a comprehensive look at the situation. We'll share a few of the many bullet points that just make me (and I'm sure many of you) wonder why our political leaders can't realize that the current course is a disastrous one.
Over the past 20 years, federal spending grew 71 percent faster than inflation.
In 1962, defense spending was nearly half the total federal budget (49 percent); Social Security and other mandatory programs were less than one-third of the budget (31 percent). Two major entitlement programs, Medicaid and Medicare, were signed into law by President Johnson in 1965.
In 2012 entitlements were nearly 62 percent of total spending, while defense dropped to less than one-fifth (18.7 percent) of the budget.
Federal spending per household reached $29,691 in 2012, a 29 percent increase (adjusted for inflation) from $23,010 in 2002. The government collected $20,293 per household in taxes in 2012.
The excess of spending over taxes produced a budget deficit of $9,398 per household in 2012.
For every $6.80 the federal government collected in taxes in 2012, it spent $10. Consequently, $3.20 out of every $10 spent was borrowed.
Major entitlements (Social Security, Medicare, Medicaid, Children's Health Insurance Program, Obamacare) will increase from 44 percent of federal spending in 2012 to 57 percent in 2022.
In 1993, Social Security surpassed national defense as the largest federal spending category, and remains first today.
Federal energy spending has increased steadily over the past decade with the government increasingly subsidizing activities like energy efficiency, energy supply, and technology commercialization. An unprecedented $42 billion was spent in 2009 as part of the stimulus, a nine-fold increase over the 2008 spending level.
Interest on the debt is the fifth largest federal spending category, even at today’s low interest rates.
All entitlements (excluding net interest) total nearly 62 percent of all federal spending today.
Spending on the largest, Social Security, Medicare, and Medicaid, will leap from 10.4 percent of GDP in 2012 to 18.2 percent by 2048.
The big three entitlements alone will absorb all tax revenues by 2048. Other spending, such as national defense or interest on the debt would have to be financed completely on borrowed money.
Medicare is the fastest-growing major entitlement, growing 68 percent since 2002. Medicaid grew 38 percent and Social Security 37 percent.
Eli Lilly Federal Credit Union, now known as Elfcu, has served Lilly's employees and their families for over 80 years. In 2008, the credit union began to add membership from Select Employer Groups as it became more independent from Lilly itself. Now, employees from selected companies are eligible for Elfcu membership as a no cost voluntary benefit.
Aside from its array of services, Elfcu has separated itself as a leader in financial wellness.
"We are a financial wellness provider that happens to be a credit union," explains communications and education manager Michelle Payne. "We strive to understand not just what our customers want but to understand what their goals are so we can help them make the right financial choices. We're not just about our products and transactions here, but about our members' overall financial success."
As an example, Elfcu recently launched a partnership with financial guru "Pete The Planner" (Peter Dunn) with its "Fastest Way to $5K" 12-week educational program. Dunn recommends ways consumers can acquire the most savings, and Elfcu offers the tools and programs to help them achieve those goals.
When asked how economic conditions have impacted Elfcu's operations, business development manager Todd Shickel contends credit unions were dealt a softer blow than some.
"The credit unions have always been a safe haven for a member's banking services, so we didn't feel the impact of the financial tsunami like many financial institutions did," he relays. "Some financial institutions were impacted, but we have very responsible lending programs designed to be a better fit for the consumer — not what will generate the most revenue for the credit union."
He adds that the biggest change he's seen recently is in the realm of health savings — a change that emphasizes why financial wellness is so important.
"Employers have started to go to the high deductible, consumer-driven health plans," Shickel says. "They have a tool that goes with them called a health savings account — and we have a very robust health savings account platform that helps differentiate us in the marketplace. It gives the members a portal and tools to become better health care consumers… In the newer high deductible plans, it's up to the consumer to find the best services, and they have a stake in those services."
Elfcu, which boasts a global membership base, also works to parlay technology to give its clients the best possible service.
"Our access options really do exceed a lot of our larger banking competitors," Payne notes. "We launched mobile banking (elfcuMOBILE) last summer, which features a smartphone app and text banking for those without a smartphone. One fantastic feature is the remote deposit capture, so you can snap a photo of your check and upload it for a deposit. We also have a dynamic eBranch Internet banking system that we're continually updating."
She adds that beyond those electronic options, Elfcu offers more than 5,000 shared branches nationwide and a surcharge-free network of over 60,000 ATMs.
See Elfcu's entire video series on its YouTube page, and be sure to explore its newly designed web site at elfcu.org, including its new Life Lessons financial wellness blog.
Do you have a topic you're passionate about, and would like to know what the Indiana Chamber is working on in that area? We've developed some web pages highlighting key issues that will show you what we're focused on and offer some background on our public policies. See the pages below, and more information will be added weekly to these as the session progresses.