Indiana a target in Trump administration's push for tax reform

Maureen Groppe
Star Washington bureau

WASHINGTON – Indiana businesses have a message for Congress when it comes to overhauling the federal tax code.

“We don’t want to see a repeat of what’s happened so far with health care, where they charge up the hill but they don’t get all the way there,” said Kevin Brinegar, head of the Indiana Chamber of Commerce.

President Donald Trump doesn’t want that either.

The administration is stepping up its efforts to pass the still-developing plan to cut the corporate and individual tax rates, along with other changes. And it's focusing a lot of attention on Indiana.

Rep. Susan Brooks, R-Carmel, was among a bipartisan group of more than a dozen House members who talked tax reform with Trump at the White House on Wednesday.

“He is very enthusiastic about tax reform,” Brooks said after the meeting. “He would like for it to be bipartisan. He also indicated that if it won’t be bipartisan, we’re going to go ahead.”

In this April 7, 2017, file photo, U.S. Sen. Joe Donnelly, D-Ind., arrives for the confirmation vote for Supreme Court nominee, Neil Gorsuch, on Capitol Hill in Washington.

Indiana Sen. Joe Donnelly, one of the Democrats being heavily targeted as a potential backer of a GOP tax bill, dined in a small group of senators with Trump on Tuesday night.

Donnelly, who is one of the most vulnerable senators facing re-election next year, is the reason Indiana reportedly is on Trump’s travel schedule for a public push for passage.

And Vice President Mike Pence is expected to make three tax reform-related trips to Indiana, starting next week, according to Politico. (Pence’s spokesman did not respond to requests for comment.)

Businesses across Indiana also are making their own push with the delegation.

Senior leaders at Cummins Inc. have talked about tax reform with Donnelly multiple times.

“We’ve definitely emphasized with him the need to lower the rate,” said spokesman Jon Mills. “The main thing is to make sure that large manufacturers like ourselves are able to compete globally.”

Eli Lilly and Co. says Donnelly has been “very receptive” in meetings company officials have had with him and other members of the delegation in recent months about what changes Lilly hopes to see. Those include lowering the corporate tax rate and changing the way the company’s overseas earnings are taxed.

“We believe he genuinely understands the positives of action and the cost of inaction,” the company said in a statement.

Tax reform is a top priority for the Indiana Chamber of Commerce, which will be sending more than 100 members to Washington, D.C., later this month for its annual lobbying trip.

By then, GOP congressional leaders hope to have at least an outline of the areas of agreement between them and the administration.

Trump wants to reduce the 35 percent corporate tax to 15 percent, a cut House Speaker Paul Ryan — as well as some of Trump’s own top advisers — have said will be difficult.

“We would like to see 15 percent,” Trump reiterated Wednesday before his meeting with Brooks and other lawmakers.

The Indiana Chamber and others say they’re hoping the rate can be cut to at least 25 percent. They argue the U.S. rate is the highest among industrialized countries. But many businesses are eligible for deductions and other tax benefits that reduce the rate they actually pay. 

Lilly, for example, had an effective tax rate of 18.9 percent last year and expects to pay 23.5 percent for 2017 taxes.

If Congress is going to cut the tax rate without ballooning the deficit — which is what the Indiana Chamber of Commerce advocates — that will mean eliminating some of the tools businesses now use to reduce their taxes.

While some companies could end up better off, others might have to pay more.

“We’re waiting for the details,” said Andrew Berger, vice president of governmental affairs for the Indiana Manufacturers Association. “What tradeoffs are on the table is going to make a big difference in how an individual company will respond to the bill.”

Donnelly, who declined an interview request about his meeting with Trump, said in a statement that he’s focused on changes that would reward companies that keep jobs in the United States and penalize businesses that move them overseas.

Berger said a potential problem with such changes is companies can’t make big shifts in factory locations in the blink of an eye.

“Even if the policy is done the right way, it will take years and years to change,” he said.

Brooks said she would like to see benefits for companies which invest in the U.S. workforce, if the tax rate is lowered on profits companies bring back from overseas operations.

“I brought up that we need to incentivize investing in our work force,” Brooks said of the White House meeting.

Trump, in public remarks before the private meeting began, said his priorities are helping the middle class and boosting jobs.

“The rich will not be gaining at all with this plan,” he said.

But the tax outline he released earlier this year included cutting the top tax rate for individuals and repealing the estate tax.

Democratic leaders have said they won’t support tax changes that benefit the wealthiest Americans or add to the deficit.

"Tax reform cannot be a cover story for delivering tax cuts to the wealthiest," Democrats wrote in an August letter signed by all Senate Democrats except Donnelly and two others facing re-election next year.

Despite the many difficult details that must be worked out, Berger of the Indiana Manufacturers Association, said he’s more optimistic than any time in the past that something will pass.

“Clearly people know it needs to be done,” he said. “The downsides to the U.S. tax structure are not secret.”

Contact Maureen Groppe at mgroppe@gannett.com. Follow her on Twitter: @mgroppe.