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Taxes Now Conference Attendees Told to “Act Boldly and Implement Slowly” When Considering State Tax Reform

Former Majority Leader of the Indiana State Senate, Brandt Hershman, spoke as the keynote of the Utah Taxes Now Conference about Indiana’s efforts on tax reform over the last several years. This has lead to Indiana’s economic outlook ranking skyrocketing from 24th place to 3rd place in ALEC’s (American Legislative Exchange Council) annual Rich States, Poor States. Utah, by the way, has ranked #1 for all of the 12 years the report has been published.

Indiana has made significant changes in tax policy, regulatory environment, and workforce development and is reaping benefits from those efforts.

In 2010, Indiana’s legislature decided to act boldly. They saw an economy that was reliant on the stagnant auto industry where revenues were tenuous, and decided they needed to make some major changes. They slashed their individual income tax rate to a flat rate of 3.23%, cut their corporate tax rate from 8% to 4.9%, raised their sales tax rate, put a cap on property taxes, cut regulatory burdens and cut government spending. They also passed right to work legislation and got rid of minimum wage laws in the state.

The results have been astounding. Forbes now ranks Indiana as the #1 state for regulatory environment in the entire nation. They are seeing over $3 billion in new investment this year alone, and 55 companies have moved from Illinois to Indiana since the changes were made. Boeing, Saab, Rolls Royce Aviation, Subaru, Honda, Toyota, Salesforce.com and GM have all expanded or invested more in the state since the changes. They have seen $5 billion in new telecom investment and have the most 5G wireless deployments in the United States.

While Indiana is catching up, Utah has a chance to continue as a leader among states as we debate our tax reform efforts.

Mr. Hershman told the attendees that Indiana has a “gift that keeps on giving” just like Utah does. Utah’s continual gift is California, as population, year after year, flees its high tax rates and burdensome regulatory environment. For the very same reasons Indiana has Illinois, as their state lawmakers double down on failed policies that drive businesses and individuals out of the state and right into the lap of its next door neighbor, Indiana.

Senator Hershman finished by giving several pieces of advice for Utah policymakers. Most importantly, Utah policymakers need to have a solid, long term plan as any changes are made. He told the attendees Utah should not make changes just for the sake of change. Tax policy is inherently complicated and hard to explain, and so it is easily demagogued.

Mr. Hershman said that Utah ought to communicate better on tax policy and take pains to properly explain the issues and problems Utah is facing or expect significant opposition. Business decisions are made over time, but revenue change from tax cuts is immediate. Therefore phasing in changes or matching cuts with spending reductions is always the wisest path to take.

Finally, he urged Utah to “act boldly and implement slowly”. That is solid advice for Utah policymakers to follow as they look to modernize the tax system for future generations.

To listen to Hershman’s keynote address, click here.



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