sealPurdue Letter from the President

February 2002

In last month's letter, I talked about the founding of the Alliance for Indiana's Future – a broad-based coalition that formed to support the state’s efforts to meet the immediate fiscal crisis and solve the longer-term structural problems in our tax system.

A lot has happened in recent weeks, and during this brief period the alliance has established itself as a credible voice in the ongoing state budget debate. With members from all sectors of education, large and small businesses, agricultural, local government, and the health industries, the alliance is a non-partisan organization whose purpose is serve as a resource for state governmental leaders who have the responsibility of dealing with state budget and tax issues.

Both the legislative and executive branches of our state government have responded impressively to the significant challenges the state faces. As we near the end of a process that will determine whether Indiana prospers or falls behind in the global economy, I am, of course, concerned about Purdue's future. Proposed budget cuts could cost the university up to $90 million for this biennium. I believe we must do everything possible to avoid this scenario, but I also believe the state must do more than support higher education.

The thing that brought the alliance together is recognition that education, the various business interests, government and the people of the state all need one another. We will either succeed together or fail together in our effort to take charge of our destiny.

We are keenly aware of the need to transform the Indiana economy, because such a transformation is necessary to create the additional state revenues needed to support education and provide the jobs in the Hoosier state for our future graduates.

One example is the research and development tax credit given to businesses that invest in new ideas. We believe this credit should be increased, made permanent and simplified. Research and development is the seedbed of tomorrow's high-skill, high-wage industries. An exemption from sales tax for R&D equipment makes sense because it fosters high-tech startups.

In addition, the alliance believes business personal property taxes need to be relieved. Indiana’s tax on inventory limits the state’s ability to capitalize on its natural geographic advantage as a center for distribution.

A repeal of the corporate gross income tax along with a simplification of the corporate tax structure would be very helpful, especially to small startup companies. These companies are not small in our state's future. We have to help them grow up. A tax on net profits, instead of gross income, makes more sense, especially in a state that is trying to encourage new business.

Under the proposals the alliance has made to the Legislature, many business members of the alliance would actually pay more than they do under the current tax structure. But they support these changes because of the transforming power they embody. We believe this is a point in history when Indiana can seize an opportunity to better itself. But we also believe that if the moment passes without action, it may not come again.

As I write this, members of the General Assembly and the executive branch are struggling with difficult and complex issues. The Alliance for Indiana's future is determined to lend its voice and its support in these efforts to move Indiana forward.

Martin C. Jischke