Indiana lawmakers are divided over the question of whether to give tax breaks to large corporations and data centers.
An interim study committee meeting became heated Wednesday as lawmakers sparred over the effectiveness of tax abatements.
The debate kicked off after Indiana’s Office of Fiscal and Management Analysis presented a report that found little evidence that abatements incentivize businesses to move to an area on their own.
Indiana leaders have long touted the state as a business-friendly environment. Tax abatements are often used to suspend or reduce the amount of property taxes a new business needs to pay in order to incentivize that company to build in a region. The argument for those abatements has been that the economic benefits, including new jobs, make sense for local governments.
Lauren Tanselle with the fiscal office explained to lawmakers that abatements have had mixed success, even as local governments are increasingly utilizing them.
“These are the most used local economic development incentives in Indiana,” she said. “Tax savings have increased over the past several years. We can see that in [2017] the total tax savings were about 182 million, and in 2026 they rose to 322 million.”
Tanselle’s comments immediately received pushback from Sen. Scott Baldwin (R-Noblesville).
“That's an incredible thing to hear,” he said. “What informed that statement that these abatements have no impact on the decision a company might make as to whether to invest?”
As the report presentation continued, Baldwin repeatedly pushed back on the idea that abatements didn’t work - eventually saying he simply disagreed with Tanselle’s findings.
“To say that if they [businesses] were going to do it anyway, this was just reducing income for taxpayers is a but for conversation,” Baldwin said. “I'm not sure that's a qualified statement.”
Under the state’s analysis, the “but for” question is defined as whether an investment would have been made “but for” the underlying incentives.
During the meeting, Sen. Fady Qaddoura (D-Indianapolis) pivoted to ask why Indiana is giving out so many abatements to data centers, noting that it was his understanding the total abatements offered to data centers in Indiana were roughly $694 million as of June.
"I’m completely perplexed by the idea that Mark Zuckerberg and Jeff Bezos need tax incentives from Hoosiers," Qaddoura said. “I think we really need a comprehensive review, regardless of economic theory of what these data centers bring, regardless of the environmental impact, water, electricity, utilities.”
Sen. Chris Garten (R-Charlestown) immediately pushed back.
"Those decisions [tax abatements] are made at the local level,” he told Qaddoura. “If we want to make changes, that has to be done during session, which would be in January of 2027."
Garten added that the idea that tax incentives to businesses haven’t benefitted the state ignores other factors.
"In the last five years, 200,000 people from all across the nation uprooted their family and said, 'I want to raise my family in Indiana.’ No other state in the Midwest can say that," he told the committee.
The question of abatements - and their efficacy - could come up during the next legislative session.
Contact Government Reporter Benjamin Thorp at bthorp@wfyi.org
