From the IBJ:
When is a tax cut not really a tax cut? An issue currently contemplated by Congress might make Hoosiers’ tax burden a little “SALTier” come next April.
Taxes and spending have historically been viewed as two separate activities. But a growing idea of viewing tax credits and deductions as expenditures is gaining traction in state capitals and the halls of Congress.
Indiana is recognized as a national leader in tax policy and has been specifically honored by the Pew Foundation for its work in tax-expenditure analysis. We have engaged in a systematic, nonpartisan and ongoing review of the value and effectiveness of the various tax credits Indiana offers.
For example, Indiana had a long-standing tax credit to encourage the installation of home insulation aimed at promoting energy savings. A detailed economic analysis revealed that the value of the tax credit to an individual was so small that it was unlikely to encourage anyone to insulate—the value of the energy savings was a far greater incentive than the credit.
This article was submitted by Sabra Northam, Barnes & Thornburg LLP. If you would like to submit content or write an article for the Government Practice Section, please email Kara Sikorski at firstname.lastname@example.org.