Hoosiers living in eight of Indiana's nine congressional districts would see their federal tax burden go down if the Democratic-controlled Congress enacts Democratic President Joe Biden's American Families Plan and American Jobs Plan.
That's the conclusion of a new analysis by the Tax Foundation, a nonpartisan Washington, D.C. think tank that generally opposes high tax rates and tax increases.
According to the Tax Foundation analysis, the average tax cut in Indiana's 1st Congressional District, which includes all of Lake and Porter counties and western LaPorte County, would total $180.54 in 2022.
The reduction largely is due to Biden's proposal to continue through 2025 the enhanced child tax credit currently in place through the American Rescue Plan, along with maintaining the more generous earned income tax credit, child and dependent care tax credit, and health insurance premium tax credits.
As a result, most of the tax savings would go to Northwest Indiana families with children whose annual household income is below $112,500 for head of household filers, and less than $150,000 for joint filers.
The average tax cut is even larger in Indiana's 4th Congressional District, which includes Newton and Jasper counties. Residents there can expect to pay $252.90 less in 2022 if Biden's plans become law, according to the Tax Foundation.
In north-central Indiana's 2nd Congressional District the average tax cut would be $155.34. The 7th Congressional District, centered on Indianapolis, has the highest average tax cut at $883.94.
The Tax Foundation projects only the 5th Congressional District would see a tax increase, on average $1,171.13.
That's largely due to high-income families living northeast of Indianapolis not qualifying for the increased child tax credit, along with Biden's proposal to restore the corporate income tax rate to 2017 levels to pay for a once-in-a-generation infrastructure plan.
Despite the tax savings for their constituents, it's still unlikely any of the seven Republicans representing Indiana in the U.S. House will support either the American Families Plan or the American Jobs Plan.
Records show that while U.S. Reps. Frank J. Mrvan, D-Highland, and Andre Carson, D-Indianapolis, have backed Biden's plans, the Hoosier GOP House delegation has uniformly opposed the major planks of the president's legislative agenda — often to their detriment.
Earlier this year, Biden called out U.S. Rep. Greg Pence, R-Columbus, for telling small business owners "help is on the way" amid the COVID-19 pandemic, despite Pence voting against the American Rescue Plan that funded the Restaurant Revitalization Fund Pence was touting at the time.
U.S. Rep. Jim Banks, R-Fort Wayne, also said last week he was grateful the American Rescue Plan — which he voted against — provided funding to many local police departments after Banks was accused on Fox News of attempting to "defund the police" by voting against the relief legislation.
According to the Tax Foundation, the average tax cuts in Indiana's congressional districts become average tax increases beginning in 2025, as some of the tax relief for families must be renewed that year by Congress while the business tax hikes continue indefinitely.
U.S. Rep. Jim Baird, R-Greencastle, said that's reason enough for him to oppose the Biden measures.
"Thanks to Trump-era tax reform, Hoosiers have enjoyed decreased tax rates since 2017," Baird said. "Data shows that under Biden’s tax plan, the average resident in Indiana’s 4th Congressional District will see a tax increase every year from 2025 until 2031, starting at an average increase of $41.71 and rising to $685.36."
"Biden promised that only the top 2% earning more than $400,000 a year would see increases, but based on this data, that simply isn't true."
There's no way to know at this time exactly which tax provisions of the American Families Plan and American Jobs Plan will survive the legislative process in Congress and ultimately make it to Biden's desk to be signed into law.
But Lauren Ganapini, executive director of the Indiana Democratic Party, said when even a conservative-leaning organization like the Tax Foundation can see Biden and the Democrats have a vision to create a better future for Hoosier families, Republicans ought to get on board.
"Democrats have delivered on the American Rescue Plan, and it's why we look forward to passing the American Jobs Plan, because Hoosier workers deserve to earn higher wages, affordable taxes, and the opportunity of success in a 21st century Indiana. When Indiana voters elect Democrats, we deliver for families," Ganapini said.
The Tax Foundation analysis of the localized impact of Biden's tax proposals is available online at: TaxFoundation.org.