Policy Documents

Are Tax Incentives Part of a Competitive Tax Code?

Scott Drenkard –
November 20, 2013

In tis policy document, Scott Drenkard writes that even though credits lower the tax burden of a particular tax filer, in most cases we see them as poor tax policy. In a broad philosophical sense, we see credits as creating an uneven playing field. Some businesses might get the benefit of a preference, but other businesses that aren’t engaging in whatever activity is deemed “favorable” are stuck paying the full sticker rate of the tax. The most growth could be achieved by closing tax preferences and directing revenues toward lowering rates overall. There are two ways that Indiana can compete with other states, and one is vastly superior to the other. The first way is by trying to pick and choose which groups get competitive rates. The better way is by offering one competitive low rate for everyone.