In Red states like Indiana, legislators and business interests routinely spout–and clearly believe–a lot of persistent claptrap about taxes. Taxes are bad. They should be minimized whenever possible. They may be–like death–unavoidable, but that doesn’t mean we shouldn’t do whatever we can to avoid them.
Are there problems with this reflexive approach? Let me count the ways….
Being indiscriminately anti-tax is probably the most fundamental error in today’s political discourse. To state the obvious, governments need resources if they are to provide the services we demand. The proper way to approach any system of taxation is to ask, first of all, whether We the People are getting our money’s worth. Are we getting value for the dues we pay to live in a civilized society?
When people who can afford it decide to join a country club, they evaluate the appropriateness of the dues they will pay by considering the benefits of membership. When my husband and I decided to take the cruise we are currently enjoying, we focused on what was included in the (considerable) fare being charged. Yet, when it comes to taxes, people rarely focus on the variety and appropriateness of what our dollars are buying.
The proper questions are: how are public services being delivered? Are tax dollars being wasted on services we don’t need government to provide? In the alternative, is the failure of government to provide a particular service costing individuals far more than a collective approach would cost them? (Health insurance comes to mind…) Is there credible evidence of corruption or inefficiency we need to address?
Beyond that fundamental issue of value for our tax dollars, discussions of tax policy need to focus on the fairness and transparency of the system. The question shouldn’t be whether to impose, raise or lower taxes–the question should be how. What are the pros and cons of property taxes versus income taxes? What is the difference between a justifiable tax incentive and a politically-dubious loophole?
It is so much easier for politicians to rail against taxes and tax rates than to get “down in the weeds” of tax policy.
What triggered the foregoing diatribe was a recent commentary in the Capital Chronicle that focused on revelations from a recent hearing of the General Assembly’s State & Local Tax Review Task Force. The hearing was held to consider proposals (floated by legislators and at least one candidate for Governor) to replace the state’s personal income tax.
Testimony at the hearing pointed to the considerable downsides of that proposal–it turns out that, among other problems, eliminating state income taxes would put a greater burden on the Hoosiers who already pay the largest share of their income in taxes.
But national experts also laid out a framework that would give Indiana’s lawmakers the opportunity to rethink how the state’s tax and budget structure can unlock Indiana’s true economic potential and allow all Hoosiers to thrive.
Some of the testimony presented to the Task Force was truly jaw-dropping. For example, The Tax Foundation testified that at 7%, Indiana’s sales tax rate is tied for second-highest in the nation (behind only California), and that it is “definitely not possible” to properly eliminate or replace the individual income tax.
Furthermore, the Institute on Taxation and Economic Policy (ITEP) demonstrated that not only do lower-income Hoosiers currently pay nearly twice the proportion (12.8%) of their incomes in state and local taxes compared to the wealthiest households (6.8%), but that Indiana already has the 12th-most regressive state tax structure in the country.
ITEP also showed that eliminating the state income tax would provide a windfall of $33,964 for the top 1% of earners, but a mere $203 for the bottom 20% of Hoosier earners. Likewise, replacing half of the income tax with a 9.5% sales tax would still gift $29,507 to the wealthiest while causing a net $62 tax *hike* for 1 in 5 Hoosier families.
Legislators like to characterize a low tax rate as a magnet, insisting it will draw people and jobs to the state. But as the commentary notes,”Indiana’s tax system isn’t making the state competitive even in the Midwest, where Indiana is worse than average in the region for real median wages, unemployment rate, poverty, and low wage jobs throughout the economic recovery of the past three years.”
And women sure aren’t moving here for reproductive health care…
Again, the issue isn’t cost; it’s what value are we getting for our dollars?
As the commentary notes, Indiana could fully fund affordable housing programs, universal child care, and tuition-free technical education–all for less than the revenue that would be lost from the proposed, lopsided tax cuts.
Maybe it’s just me, but I’d rather pay dues to the club that keeps the roof repaired and the chef paid…
The only consistent theme in Republican tax thought is MORE tax cuts for the rich. They make many unsound claims about the benefits of those cuts. The benefits never show up except in the bank accounts of their donors. They also like to DEFUND the collection wing of the IRS. Every dollar they “Save” results in at least 10 dollars in lost revenue to the government. The rich now know that there is a near zero chance of enforcement so they can do whatever they want to avoid paying their fair share. The W-2 folks pay, the rest…not so much. That is their real goal. NOT the common good that Sheila speaks of.
Speaking of health care… After WW II, Great Britain, rising from its ashes instituted the National Health System offering the peculiar explanation that since everyone sacrificed greatly to defeat the Nazis, the government was obliged to provide free health care to all its citizens. Except, it wasn’t entirely free. A little money was deducted from earnings to pay into that system. The amount was small given that everyone – no exceptions – paid into it. It still works today despite the “conservatives” attacking it and trying to turn it into a second-rate, for-profit entity. Sound familiar?
Our capitalists don’t want to hand out ANY free stuff. They call it socialism and run screaming into the night for fear that it might take money from their huge, overflowing profits. Enter Ronald Reagan, the puppet for Donald Regan. These economic monsters cut corporate tax rates in half then paid for the government and their tax cuts by taxing social security. Nice. Typical.
Add to that the Republican-sponsored bills and laws that allowed the wealthy and the corporations/banks to stash their profits in the Cayman Islands – and any other foreign bank they trusted to avoid paying taxes on those profits. That’s how over $35 trillion ended up offshore. There is more U.S. cash in foreign banks than in our own. Let that sink in.
Imagine how many of our hungry children we could feed and educate with a trillion dollars here and there. Imagine how much more efficient and patient-oriented a PRO-active healthcare system if we brought back another few trillion.
Oh, but that would mean more taxes to be paid by the wealthiest among us. Can’t have that.
This is America, after all. We can’t have “those” people taking free stuff. They might think that they’re citizens in an egalitarian society instead of living in one of glorified indentured servitude. See student loan debt for that definition.
There are a lot of people that really believe that low taxes are the be all end all of good governance. Ask the people of Kansas after 20 years or this policy have reversed course because infrastructure is falling apart, education levels dropping, employers moving out, and the population and economy are declining.
Last years Indiana automatic surplus “tax refund” made me mad. I am sure a $200 check made a difference to those bottom 20%, but for most of us it hardly made a difference at a time an overheated economy was already experiencing 8% inflation. It felt like a bribe from Indiana Republicans with the added benefit of helping to hurt the Biden economy.
I’m also irritated how the state treats its metro areas. Dollars flow to rural areas while city’s struggle. Everything from road funding to county payroll taxes. If you work in Indianapolis but live in doughnut county, very little of the payroll taxes goes to Indianapolis despite the fact the amount of infrastructure and resources Indy pays for to support that business and it’s employees.
The Republican Party is best understood by experience with corporations that were once thriving financially (financially, it is the sole measure of corporate success). They forget about income because their failing business plan can no longer fund product and process development, so they have no viable future in a world of brief product lives.
They focus solely on cutting expenses because shedding assets is the only way to fund executive golden parachutes.
Republicans believe that the American Dream is over. We cannot compete in the coming world. They fund politicians’ financial success by supporting corporate executive golden parachutes, and, in the end, the wealthy walk away with the country’s financial assets, leaving the vast majority of us workers holding an empty bag.
Boy, that rubs me the wrong way, and many others do. But, boy, do some in rural America look forward to starting a new country like the one formed in 1776 to rearrange things so that owning land and enslaved people guarantees financial and power appetites. They see that as good old American patriotism.
Boy, are we a divided country? Or, we were, in my opinion. America is becoming more “woke”. The elections next year will sweep out the might-as-well-be Confederate politicians and replace them with the future Obamas and Bidens.
Forget the country club faction; demand that big businesses, corporations, the super wealthy and the MAGA, Freedom Caucus lawmakers pay for maintaining their own entire infrastructure. Highways, roads and streets leading to their factories and modern office sites, bringing in their big bucks and serving their needs, the sewer systems serving their businesses and their mansions, provide their own police and fire departments…and include churches in that group.
Let them provide their own medical facilities and staff them with quality medical care personnel, maintenance, security and custodial systems. And never, never forget the sports facilities and arenas the majority of taxpayers cannot afford to attend. Take away what WE are paying to provide these services they want on the cheap or free which they believe their bank account levels qualify them for. Let US avail ourselves of these basics of day-to-day services we pay for for all people, we would then be safer and live in decent neighborhoods.
Let us not forget the elephant in the room….. tax free churches and other “not for profits” that take in tax money to support themselves as in vouchers and grants.
Reducing corporate and business income taxes works wonderfully for our state legislators’ reelection campaigns and our GOP governors love to boast about enticing new employers to IN. Never mind that they are typically low wage employers if they land anywhere other than the Indy metro area.
Gosh, why would the GOP legislators care about making our financially struggling low wage workers even worse off with a higher sales tax as long as they can convince voters they will be better off with no income tax before the next election? If eliminating the income tax reduces the overall state tax revenue they would have even more reasons to claim we can’t afford social safety nets for the poor and the low wage workers. Their campaign donating corporations and business owners could get what they want with more desperate people willing to work for even lower wages. Maybe they could even reduce wages below the current $7.25/hour minimum. It sounds like a perfect plan.
Theresa mentioned my favorite subject – the tax-free population like universities, hospitals, churches, YMCAs, etc.
Payment in lieu of taxes (PILOTs) for all tax-free organizations.
We are mostly still living in the Reagan era concerning taxation. Friedman’s trickle-down economics is slowly being replaced, but taxation on the rich (or the lack of taxes) remains a prominent policy — imagine that!
Spending is also an issue for Republicans, or so they say. They mean eliminating all programs that don’t assist them directly so they can minimize taxes. Koch and the crowd led that movement under their “institutes and university studies.”
Therefore, let’s start at the country club first and then work our way to payroll taxes. Low-hanging fruit.
Also, for those mentioning how Indiana GOP borrows from Indy and gives to the donut rings, our state does the same as we rely on the federal government to exist. I believe most red states are net borrowers, with few exceptions like Texas and Florida.
The other day I had a brief conversation with a fellow who believes, as best as I could make out, that welfare, and similar support systems are designed to attract (or buy) “future voters.” We might pick up that discussion down the road, but he apparently misses the point that it is a valuable thing to empathize with, and help out those who are struggling, for whatever the reason, and it’s not that they are just “beggars,” as GWB once called our veterans .
Taxes used to help those on the bottom of the socio-economic ladder would seem to benefit the general society, when people use that support to move upwards.
But, the GOP is only interested in providing more for the already wealthy, ASAP, so lower taxes for those folks are their way to go. Talk about buying votes!
I don’t have a huge income, so I don’t pay large sums in Indiana taxes, but I do fully understand and appreciate that services are not free.
My biggest problem is, as was touched on in a previous comment, that I don’t think I receive the value for the taxes I pay as a property owner in Broad Ripple Village that I should.
I participate in a group that meets at various locations around the city and find that I am disgusted with the beating that my vehicle takes in the drive down to the Fountain Square area and how often I literally cannot see what lane I am in, or need to be in, even when the pavement is dry and the danger that presents to others in addition to myself.
I cannot help but think that other much needed services also suffer from the lack of appropriate funding that should be flowing into them. I get very upset when I see tax revenue returned like it was not needed when so much need seems ignored.
This is probably irrelevant but it blows my mind how the Republicans can complain about taxes and then the Trump tax plan raised my income taxes by 25%.
Those who provide the goods and services (the rich) don’t pay taxes. We pay their pretended taxes. As a Keynesian I am here to tell you that we pay far more taxes than we think we do, and here’s how > When taxes go up for the rich providers of goods and services they simply raise prices to cover such new outlays with the result that their tax increases, however roundabout, are paid by us as consumers of their goods and services while their bottom line profits remain stable – or even increase. What we thus pay via withholding or estimated means is just a down payment and may even be less than the hidden taxes we pay on behalf of our providers of goods and services, depending upon the amount of consumption of such goods and services.
Why, then, are the rich providers of goods and services always complaining about high taxes since they don’t pay any? Easy answer > With a tax increase they have to raise prices in order to maintain their profit margins and taxpayers have less disposable income with which to buy their goods and services, a double whammy and a demand killer.
Keynes correctly wrote that the holy grail of economic growth was defined by demand, so any demand killer would have the opposite effect. Just lately we have had lively demand and the economy is booming, but corporations have seized upon Covid and wage increases as excuses that have given us inflation (a demand killer) with their cost increases for their goods and services, thus increasing our hidden liability to pay for their taxes, all in tandem with the demand killing policies of the Fed. Take the Fed’s increase in mortgage rates of interest on much needed new housing, for instance, an intentional demand killer.
Finally, what Vern wrote on the practical application of the pro-corporate policies inviting offshore tax evasion we are saddled with today.
The obvious problem here is of course the “defense” budget. Most of what we pay in is not returned as services.
Compare that to most European countries. The question there is not how many taxes they pay, but rather how much deposable income they have. And that is considerably more than we have in the US.
Until people here realize the difference in concept, we are not going to change anything. It is so easy to claim that other countries pay more, without pointing out the services they receive for those taxes.
I think the real problem in re taxation and other areas of governmental control of our lives is that we do not trust our government peopled by political hacks to do what is best for us. Thus years ago my wife, my mother in law and I flew to visit some of their relatives in Sweden. We visited a couple who lived in a condo in downtown Stockholm, a luxurious home laden with jade and paintings. He was a lawyer and a rich one. He and his wife had a chalet in the Swiss Alps that they sometimes flew down to for a weekend of skiing and a condo in Majorca, an island in the Mediterranean. They were world travelers and we used to receive cards from them from Hong Kong and other such global sites. His English was better than mine and I discovered for the first time in Stockholm that my mother in law was fluent in Swedish.
I wondered how one could amass such wealth in high-tax democratic socialist Sweden so I thought I would play right wing Republican and asked him if his tax rate weren’t about 50 percent. He hesitated as if he weren’t sure and then said “Yes, I think that’s about right, Jerry.” I then said “That’s a little high, isn’t it,” and I will never forget his reply: “Well, Jerry, that depends on what you get for your money.” He then set out a litany of goods and services paid for by the government that, afterwards, when counting up such goodies, I concluded by such standard that we pay more taxes in this country than Swedes pay and for a lot less and just as importantly, all Swedes are covered while only those who can afford to live in our economy of a for-profit corporate culture based upon greed are covered. Thus the phrase “medical bills,” for instance, is not a part of the Swedish lexicon whereas here medical bills are the leading cause of bankruptcy filings. Sick and broke? Too bad. Live with it.
The old adage that “The poor will always be with us” is corporate propaganda and disproven by the Swedish example, so what to do? Remove the political hacks from positions of power, and with the knowledge that Swedish corporations are happy and profitable in their political and economic environment, initiate a new economic and political citizens’- first culture along the lines of the Swedish example. When? Yesterday.
Taxes are just one issue, so is criminal activity which can without a doubt, rival taxes in a way, just ask George Santos.
You have bands of criminals attacking shipping companies and shipping transportation on the roadways. They got their cue from
Fast and Furious. Droves of shoplifters, some, especially here in Chicago, from Venezuela. Just settled in, and already looting stores in criminally organized bands.
What about the thousands upon thousands of murders every year by military type weapons? Or, the mental health issues, including suicides!
The abuse of children, the thousands of children that disappear every year never to be heard from again. The parameters of Nationwide policing becoming uniform across every state. The defund the police thought process is having a huge effect on the amount of debauched criminal behavior. It is reaching, or way past reaching epidemic proportions.
Those military type weapons mentioned above are killing police officers in droves. Without law enforcement, without laws being obeyed by civil society, you have no rational society. But you have the beginnings of anarchy. And judging by what’s going on in this country today, and the world in general, anarchy is putting it mildly.
Stopping the school voucher program is a great beginning, but they’re also has to be improved structure in the schools. Bringing education up to par. Not just in white wealthy suburbs, but everywhere across the board. STEM should be the starting point, then advance from there.
When a fifth of the population is incarcerated, is that even sustainable? It’s about $70,000 to 90,000 a year to keep a person incarcerated. Imagine if we had mental health facilities where people could become productive instead of slammed in a jail cell!?! When our prison systems are the largest mental health facilities we have, that is completely insane. But, the prisons which are privately run, and even those publicly run, get that money for each prisoner, so why not incarcerate all the mentally ill? It helps their bottom line!
These fake religious leaders continue to prey on the stupid and ignorant, because folks’re too lazy to actually figure out what scripture or any holy book has to say. Most of them would steer people in the proper direction, not giving people an immoral permission slip for condemnable conduct. The previous president of the United States (PPOTUS) could teach classes on that. Soon, food is going to become more scarce because of climate change, and places where they could possibly sow and harvest, the cost of fuel might make it a fool’s errand.
Just the blatant hatred on display on a daily basis without any sort of remorse, tells you that there’s something bigger a foot than just, “people are a little weird now.”
I’ve refrained from being out in public a whole lot, I worry about my family, I watched some guy casing our house the other day. That is until the dogs made it clear he wasn’t welcome. One of our neighbors up the street, had his dogs poisoned.
And one thing one of the state representatives told me, the teachers unions fight against lowering taxes, because of the school voucher programs. Now we will see if the taxes go down once vouchers are no longer allowed here. Somehow I don’t think that’s going to reach fruition. And once they have the tax increases, they will never go the other way.
This whole country and really the world has become a joke, and it’s on fast forward on its road to complete lawlessness!
But it makes for great bumper stickers, which is the critical thinking level of too many Hoosiers.
The introductory paragraph of the US Constitution has the phrase “to promote the general welfare.” How is that to be done without some form of taxation? I would like these clowns who object to taxes to answer that question. Scaling the point down to the level of the states, the concept is still there.
Jeff; your reference to the lack of lane markings is problematic in many areas, along with the lack of enough street lights to see where you are going. My east side district voted out the City Councilor whose improvements in this area were in the higher income sections. One of his much bragged about “improvements” was fifteen new street lights on Mitthoeffer Road between East 10th Street and Washington street, covering the entire area of the weed filled parking lot and virtually empty Washington Square Mall. Bike lanes on East 10th Street between Shortridge Road and Arlington Avenue start and stop depending on the width of the 2 lane street. When the bike lane ends there is a sign stating bicyclists have the right to use the traffic lane. I have driven that stretch of 10 Street for 22 years and have seen THREE bicyclists.
We do pay the taxes meant to provide maintenance and repairs to all streets and roads; especially on heavily traveled areas. I hope wherever your neighborhood areas is that you will see improvements decided by your Councilor; Mayor Hogsett appears to be using President Joe Biden’s Infrastructure Bill to begin improvements in long forgotten areas.
Nothing is free. However some believe everyone else should pay more taxes.
When the state refund kicked in, I think most people were really upset that that money didn’t go to improving roads especially there’s so many roads that need improving right now. Instead of doing it correctly, they do a patch job and make the roads more like a washboard than ever.
I found it interesting to see Speaker Johnson have push thru a continuing resolution. Something similar to what McCarthy put forward.
Of course, those that are better off should pay taxes.