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State Tax-cut Plans Tempered By Caution In 2013

In December, Michigan Gov. Rick Snyder signed a law phasing out property taxes on industrial equipment, eventually saving businesses $600 million a year. But it will come at a cost. Local governments will be allowed to levy special taxes to recoup some of the lost revenue. And the state promises to reimburse most of what police, firefighters and other local services would lose.

Lawmakers in other states are expressing greater caution heading into 2013.

Newly elected Indiana Gov. Mike Pence campaigned on a new 10 percent cut to the state's income tax rates. But Pence's fellow Republicans appear apprehensive about the roughly $500 million price tag. House Speaker Brian Bosma has cautioned that any tax cut must be "sustainable." Budget leaders have hedged on whether Pence's proposal has a shot at passing.

"I don't know if we've decided that yet, I think we'll have to see how their numbers work out," said Republican House Ways and Means Chairman Tim Brown.

Republican Louisiana Gov. Bobby Jindal has proposed reworking the tax code. But he, too, wants it to be "revenue neutral," so if rates are cut in one place, an exemption could be eliminated in another.

North Carolina Gov.-elect Pat McCrory, a Republican, wants to reduce income tax rates to the level of surrounding states such as South Carolina and Virginia. But the proposals under discussion would offset that lost revenue with extra sales taxes.

"We're talking about a revenue-neutral stream to government," said North Carolina Sen. Bob Rucho, a Republican. "This, we believe, will put North Carolina on the cutting edge of economies in the country."

Oklahoma Republican Gov. Mary Fallin hopes to win passage of an income tax cut that stalled in the Legislature last year, but said financial uncertainty in Washington may affect what she is able to propose.

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