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Jeffrey T. Bennett Explains Local Governments’ Powerful New Economic Development Tools

09.11.2014

BGD attorney Jeffrey T. Bennett discusses the future for a tax abatement plan that relies heavily on the discretion of local governments in Indiana in a recent edition of Indiana Manufacturers Association Tax Talk.

The State of Indiana has been gradually expanding the purview of local governments in structuring and approving property tax deductions for real property improvements or new manufacturing equipment. According to Bennett, this will allow local fiscal bodies to take a more direct, active role in attracting and keeping productive businesses in their communities.

Indiana Tax Abatement Revamped

In July 2011, Indiana tax abatement was revamped. The big change from Indiana’s previous tax abatement plan was that instead of a 10 year “stair step” plan where property taxes on newly constructed property would be abated 100 percent after construction the first year, 90 percent after the second year, 80 percent after the third year, and so on.

Companies could receive an alternative abatement plan, not to exceed ten years based on new crieria:

  1. The total amount of the taxpayer’s investment in real and personal property;
  2. The number of new full-time equivalent jobs created;
  3. The average wage of new employees compared to state minimum wage; and
  4. The infrastructure requirements for the taxpayer’s investment.

On July 1, 2013 this plan was changed again. The “stair step” approach was completely eliminated, requiring local fiscal authorities to declare a schedule for each granted abatement reduction, subject to a ten year limit as a default approach. Essentially, customization is now a requirement of tax abatement.

Local Economic Flexibility Expanded, Effective July 2015

Yet again local economic flexibility was expanded with Senate Enrolled Act 1 in 2014. Effective July 1, 2015, local fiscal authorities will now be permitted to allow tax abatement for “new personal property.” In addition, the law will allow for an enhanced abatement period of twenty years for new business personal property.

It is yet to be seen how enthusiastically these new laws will be embraced. These tools should be utilized by Indiana manufacturers to take the lead to keep Indiana’s economy growing strong.

Read Bennett’s column “Local Governments’ Powerful New Economic Development Tools,” in the July 2014 edition of Indiana Manufacturers Association Tax Talk.

http://www.bgdlegal.com/clientuploads/Publications/TaxTalk%20July%202014.pdf

To learn more about Jeffrey Bennett and his practice, please visit his profile

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