It’s not getting far in the Indiana House where a committee dumped the tax cut in favor of spending more on education and roads.
Gov. Pence was in South Bend on Wednesday.
If Pence’s plan is approved, Indiana would have the lowest taxes in the country.
He says when the government collects more than it needs, the right thing to do is return that money to the taxpayers who earned it. It sounds like it makes sense, but some say that money could be better used.
“I believe the time has come to get hard working Hoosiers keep more of what they earn,” Pence said.
During his visit to South Bend, the governor talked about his tax plan, which includes an across-the-board 10% cut in income taxes – 5% in 2014 and another 5% in 2015. Families would not only see more money in their paychecks, small businesses would have more money to reinvest.
“This is about jobs, by leaving $500 million in the economy,” Pence said.
Pence is a firm believer that tax cuts will jump start economic progress, but critics aren’t sure the state is in the position to give back.
“My prediction is that there’s a tough battle ahead over the next few weeks,” Pence admitted.
Former Mishawaka Mayor Jeff Rea is the president of the St. Joseph County Chamber of Commerce and says some people would like to see that money go directly to education.
“We’re really mixed on it, because our small businesses say this is really important, but we know how important education is, and if we have the best schools in the world, we’ll attract jobs, economic development,” Rea said.
But Pence says no compromise is needed.
“Hoosiers don’t have to choose between funding schools and roads and providing tax relief for working families. We can clearly do both as our budget demonstrated.”
Pence said the budget also includes increasing funding for education in the next two years, just not as much as some House leaders want.
The governor also talked about the $350 million the state has in reserves. He plans to invest that money in roads and bridges.
Many speculate a compromise will eventually be reached on the governor’s tax plan.
Republicans control both the Indiana House and Senate.
DEMOCRAT RESPONSE (John Broden, State Senator - South Bend):
"The Governor needs to slow down on his request for a 10 per cent cut in the individual income tax until the State receives the final revenue forecast in April. Before the State commits to a cut in taxes, the legislature needs to first make certain we have restored the $300 million cut to K-12 education from the last budget, fully funded critical transportation and infrastructure projects such as US 31, expanded the State's Medicaid program to comply with the federal health care law, and funded essential improvements to the Department of Child Services as recommended by the bi-partisan summer study committee.
If the State can fully fund these essential programs and the revenue outlook that State receives in April indicates that we can still afford a tax cut, then at that time the General Assembly can debate what type of tax cut to implement."