Monday, April 21, 2014

Hoosiers pay more for less

Posted By on Mon, Apr 21, 2014 at 4:00 AM

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There's an old story about a man who jumped out a window at the top of a 30-story building.

On his way down, people standing on the lower floors could hear him saying: "So far, so good."

I was reminded of this story when I read the news about how Indiana taxes have been eating up an ever-larger portion of Hoosier incomes over the past 10 years.

According to the Tax Foundation, an independent tax policy research organization, we Hoosiers paid 9.5 percent of our incomes in state and local taxes in 2011, a 1.1 percent increase over a 10-year span. This amounts to a $313 per person tax increase. Meanwhile, our per capita incomes decreased by $1,064 during the same period. Indiana has gone from being the 43rd highest taxed state in 2001 to being ranked 22nd highest in 2011.

But we rank 38th in per capita income.

For years we've been told that our lowly income standing was no big deal because our cost if living, including taxes, are cheap.

"I think it's worthwhile to look at our attractive tax rates, as well as our low cost of living," Sen. Brandt Hershman, R- Buck Creek, told the Indianapolis Star last month, poo-poohing our comparatively low rate of per capita income.

Oops.

In fairness, it must be said that the Tax Foundation figures were collected before 2013's five percent cut in the personal income tax.

But that tax cut was accompanied by significant corporate and business tax cuts, which were added to a sweeping cut for corporations enacted in 2011.

The idea, it seems, has been that if Indiana can make doing business here as cheap as possible, the state and local economies will prosper. Being good to the so-called job creators is supposed to be good for everybody.

But what the Tax Foundation's numbers indicate is that while the past 10 years or so have been great for big business owners, those benefits haven't trickled down to rank-in-file Hoosiers.

Consider this: While Indiana has been cutting corporate tax rates, it has actually made its sales tax one of the highest in the nation. This is a tax that hits the lowest income folks the hardest.

And while we've been making it cheaper to do business here, Indiana cities and towns have been forced to deal with shrinking revenues by cutting services, including public safety, health and education.

It would be one thing if we had a state economy that was booming thanks to these policies. If Indiana was a national destination for high-end enterprise and great paying jobs.

But we know this is not the case.

Our low rate of pay, combined with corporate tax cuts and, it must be added, lax environmental regulations, have made us an economic bottom-feeder.

As to job creation, our unemployment rate may be dropping, but so have quality jobs, as manufacturers and service providers seek to enhance profits by replacing people with machines.

So Hoosiers aren't just making less money than workers in most other states, we're actually paying more for fewer services.

As the man said, "So far, so good... "

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