Niki Kelly has an article in the Fort Wayne Journal Gazette entitled “Daniels: No to graduated income tax.” Unsurprisingly, the House Ways and Means Committee is looking for new sources of revenue that will replace the money lost if property taxes are reduced. One option is imposing a graduated income tax, similar, I presume, to the federal income tax structure.
The committee could discuss an amendment to House Bill 1001, which contains the governor’s plan, as soon as today to substitute the sales tax increase with a move to a graduated income tax system.
Daniels was in complete opposition, saying adjustments to the income tax are the only options on the table he would actively fight.
“A low, flat income tax rate is a big plus for Indiana,†he said. “It is why we are an island of growth.â€
Let’s leave aside, at the moment, whether Indiana truly is an “island of growth.” Why does an increased sales tax allow growth where an increased, graduated, income tax discourages growth?
Ever since the Daniels property tax proposal came out I never supported increasing the sales tax. I felt an income tax was probably more fair, also it may be tax deductable to some degree. I am glad others are suggesting a graduated tax increase.
I really think we should look into taxing services as well.
Here’s a novel idea, Let’s look into spending less. A lot less.
Just a thought.
Novel? Hardly. What would be novel is someone suggesting the actual $3 billion in cuts that would be necessary to eliminate property taxes, say, then enacting them, then standing by that as the next election turned them from the party of tax pandering into the party of permanent gibbering crackpotism. Got yer list ready?
Doghouse – you took the words right out of my mouth but I would go a bit further. Are we not getting the smallest amount of services from our state government? What more is there to cut? I like the idea of streamlining township offices into county offices and maybe even consolidating more cities/towns into county government but I have to wonder just how much that will save in dollars.
Doug, its not even debatable. Illinois and Indiana have low, flat income taxes. Michigan and Ohio have high, progressive income taxes.
Progressive state income taxes and economic growth are mutually exclusive.
Of course, we could compare states like Indiana and Illinois that have income taxes with states like Texas and Florida that don’t. Again, it’s not even close. States without income taxes grow much faster than states that have them.
If we are going to get rid of a tax, we should be looking at getting rid of the income tax, not the property tax.
When I moved from Ohio to Indiana, I celebrated, because I essentially gave myself a raise. My income tax rate in Ohio was 7%, whereas here in Indiana it is 3.4%. I could give myself that 3.4% raise if I moved to any one of seven other states. I won’t consider it now, but if I earned enough money to make the move, I’d do it in a heartbeat and have no regrets.
I also shake my head a bit when I hear the rejoinder, “well gosh, what else can we cut”, because I just don’t consider most of what government does to be “essential”. I do not feel any or much benefit from the activities of most departments or agencies. So, I have a huge list of things to cut. Wouldn’t miss them a bit.
In a better world, it would be those government departments and agencies who should submit their lists, to show the value of what they do, to merit their continued existence.
I tend to think that the defenders of our large, growing government tend to notice the handful of departments or agencies that they do value, and apply a “good” value judgment to the balance of it. But it is in the defense of those few by each of many the constituency groups that would fight for the existence of their favorite to the death that as an aggregate gives us this behemoth at every level.