The Regional Chamber of Northeast Indiana is calling for a change in state tax law. It wants a tax deduction for manufacturers restored, saying the option is available to competitors in at least 25 other states. Chamber Executive Director Vince Buchanan says such a move would create a better environment for “expansion, retention, and reinvestment in the manufacturing workforce.” September 23, 2013

News Release

(FORT WAYNE, Ind.) The Regional Chamber of Northeast Indiana today announced its support of a change to state tax law intended to create a better environment for manufacturers to expand and invest in Indiana and encourage others to choose Indiana when returning production to the United States.

Regional Chamber Executive Director Vince Buchanan said Hoosier manufacturers are currently unable to take advantage of a state tax deduction available to competitors in 25 other states. “The manufacturing sector continues to be one of the most vital economic engines in Northeast Indiana. We believe even more jobs would come to Indiana if the General Assembly levels the playing field by changing this tax law,” Buchanan said.

IRS rules allow manufacturers to claim the Domestic Production Activity Deduction, intended to help U.S. manufacturers compete globally and encourage the return of foreign jobs. This reduces their federal taxable income by up to 9%.

As part of a broad state tax overhaul in 2005, the Indiana General Assembly chose not to match the federal deduction. That means Hoosier manufacturers must add back to their taxable state income the amount deducted under the federal tax law. This makes Indiana a more expensive place to produce goods than states which allow the deduction.

BF Goodrich employs 1,700 at its tire plant in Woodburn, Indiana. Plant manager Dent Johnson said state taxes play a significant role in their relentless drive for competitiveness. “Difficult decisions are made every day about where to invest our limited capital. Applying the Domestic Production Activity Deduction to state taxes would further enhance our ability to reinvest into our Woodburn operations and would offer B.F. Goodrich a better chance to fully leverage the talent and experience that we have in our factory to grow our business.”

According to the US Bureau of Labor Statistics, in 2011 the manufacturing workforce in the ten-county Northeast region accounted for 25.9% of all employees. An Indianapolis Star article published August 10, 2013 reported that manufacturing’s share of Indiana’s total economic output was 28.2%. That marked the highest percentage of manufacturing output from any state in the country. The article states, “In 2012, Indiana had just the nation’s 16th largest economy, while its output from manufacturing exceeded all but a handful of states.”

“25 other states, including all four of our neighbors, allow manufacturers to claim this deduction and reinvest in their workforce,” Buchanan explains. “Northeast Indiana wants to be the destination of choice for manufacturers. By allowing manufacturers to keep more of their hard earned profits, we create the right environment for expansion, retention, and reinvestment in the manufacturing workforce.”

Buchanan credits Indiana lawmakers for making Indiana a rare example of a state with a healthy budget. “Implementing this tax deduction will have minimal impact on the state’s budget,” he said. “Yet, it can make big difference for working Hoosiers by helping their employers compete and expand.”


The Regional Chamber is a membership organization of more than 85 businesses from the 10-county Northeast Indiana region. Through advocacy and collaboration, the Regional Chamber promotes policies that yield a limitless future in Northeast Indiana on the strength of 21st century talent, world-class infrastructure, and a business climate that fosters investment, growth and success.

Source: Regional Chamber of Northeast Indiana

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