Tax abatement builds the tax base

Tax abatement is not the reason for local government budget woes. In fact, the use of tax abatement builds the tax base (assessed value) and contributes to increased job opportunities.  Tax abatement or the “phasing in” of business property taxes over a specific period of time is a tool economic developers use to build community prosperity. Tax abatement does not impact current government budgets and is not the handing over of taxpayer money to a private company. 

The smart use of incentives, such as abatement, signals to the marketplace that Henry County welcomes opportunities for investment.  A growing tax base is good for both taxpayers and local government. It’s important to remember that tax abatements have a definite end date and cannot be renewed once expired.

The competition for business investment from both new and existing companies is fierce. Without incentives the investment would likely occur elsewhere.  Many existing companies are competing against sister locations within their corporation for additional investment and jobs.  Tax abatement is offered in all 92 Indiana counties and in at least 35 states. Therefore, incentives like tax abatement do not make a bad business location good.  They make a good business location better.

Abatement is not just used by the state to encourage business growth; it is also used to incentivize homeownership. Every homeowner in Indiana receives a permanent abatement through the homestead credit ($45,000 deduction from home’s gross assessed value).  Actual taxes paid are capped at 1% of assessed value.  Business property taxes are capped at 3% of assessed value.  Constitutional tax caps reduce local government revenue by over $6 million.   

Without tax abatement or other similar economic development tools the following Henry County success stories might not have occurred:

A significant employer on “I” Avenue closed its doors in 2009.  In 2012, that facility was purchased by Crown Equipment and 300 people now work there.

The March 1, 2007 Courier Times headline was “300 Jobs Honda Supplier picks Henry County.”  TS Tech through a competitive site selection process built here.  Current employment is over 450.

The vacant former E-bio fuels facility in Middletown is now home to Holic Foods, a growing food company.

Over 450 people work at Boar’s Head Brand’s state of the art food processing facility on County Road 400 S.

Beacon Industries, a small manufacturing company purchased a vacant and deteriorating facility on Troy Avenue for their second Indiana location.  New employment is expected to reach 30 in the near future.  The facility is no longer deteriorating.  

In 2007, Outokumpu invested $50 million in their hot rolled plate facility.  The plant, now New Castle Stainless, has unique capabilities that offer it a competitive advantage in the marketplace.      

Over 1,000 job opportunities exist in Henry County, in part, through local government’s use of tax abatement.  This is a fantastic partnership with the private sector.

Because incentives don’t make a bad site good, Henry County must also continue to focus on creating an environment welcoming for both people and businesses with high quality schools, housing opportunities, promoting entrepreneurship and quality of life amenities such as 1400 Plaza, Honey Creek Trail, Academy Place Park, Knightstown Library’s ADA improvements, etc.

Tax abatement is not something to detest or be apprehensive of, it is one of the tools we can use to help create community prosperity. We must continue to promote quality leadership with authentic collaboration (Stellar!).  Collaborative partnerships will continue to drive community success.

Corey Murphy, CEcD
New Castle Henry County Indiana EDC

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