In its place a business income tax credit was created. This last point created controversy on the last day of the session. Republicans thought they had made a deal to allow businesses to take the income tax credit starting in 2002, but in the Senate the Democrats walked out, preventing a vote. If businesses do not pay property taxes on their inventories, someone must pay. There are essentially three possibilities.
Local governments can reduce their spending.
If inventory taxes are eliminated, one option is for these governments to provide fewer services. All other property taxpayers can pay more. The Indiana Constitution requires that inventories be assessed. Tax rates would increase. Alternatively, a large deduction could be created to offset the assessed value of inventories.