State tax climate encourages small business owners

Things are looking up for the Crossroads of America, according to new financial reports.

Indiana’s business tax climate was ranked 12th in the nation and scored higher on the evaluation than all neighboring states, according to a report from the Tax Foundation.
Indiana is becoming more business-friendly despite the sluggish economy, according to a survey of Indiana CEOs and also the study by the Tax Foundation, a non-partisan group based in Washington.

The tax report’s scores are calculated by considering business property tax rates, the sales tax, individual tax, corporate tax and unemployment insurance taxes. Indiana moved up from 14th place last year.

Not every state rose in the rankings, said Natasha Altamirano, Tax Foundation media relations manager.

“Only three states managed to cut income taxes,” she said. “At least seven as of July 1 had raised income taxes.”

The 10 best tax climates belonged to mostly rural states, while the worst belonged to urban areas; South Dakota and Wyoming were the top two, while New York and California were in the bottom three.

“It’s definitely an improvement, just being that high up in the rankings.”

In addition to the Tax Foundation’s assessment, a group of Hoosier CEOs produces a yearly report called “The State of Our Business – A Perspective from Indiana Executives,” which also measures Indiana’s business climate. The group of CEOs, surveyed by Inside INdiana Business, Butler University and Ice Miller LLP, a legal counsel service, says that compared with neighboring states, Indiana’s business climate is “making strides faster than our neighbors.”

The group cited an increase in the available labor force as well as economic incentives for businesses had improved significantly since 2008. In addition, they cited improvements in the education system as well as innovation and “overall business environment” as having improved considerably since 2008.

In addition to the five taxes ranked in the report by the Tax Foundation, Indiana is one of only 15 states in the nation that does not have an inventory tax, furthering the positive business climate. Jeff Grossnickle, owner of the ice cream shop The Chocolate Moose, said that though he was frustrated by corporate tax hikes on the federal level, taxes within the state are a positive force for local businesses.

“I just notice when we’re traveling between states, prices go up,” he said. “It definitely helps business.”

Things are not just improving on the state level, though. Monroe County has granted a local business called Print Pack, which makes packing products for the food industry, a tax abatement. The tax abatement on a new $52-million facility will save Print Pack $2.3 million during the next 10 years, said Morgan Hutton, the director of advocacy at the Greater Bloomington Chamber of Commerce.

“Our area has been buffered a little bit by the economic downturn,” she said.

She cited the diverse business community in Bloomington being able to cope better than the manufacturing-dependent parts of the state like Elkhart, which were hit hard by the slacking economy.

“It’s helped to ease the economic downturn. In general, our members have said they’re feeling the economy start to pick up.”