I retired from my government job in 2011, where most of my 28 years there were spent as a tax law specialist, dealing with federal statutes. I did some teaching, continuing education for tax professionals, at Indiana University for 5 years after retiring. I have been out of that game for a few years now, but a news story that popped-up in recent days caught my attention.
There is not just a crowded field seeking the Republican nomination for Indiana Governor in next year’s primary election, there are many candidates with access to lots of campaign cash. Hoosiers should prepare themselves to be bombarded with television and social media ads before next year’s May primary.
Candidates often look for an issue to separate themselves from the pack and start a discussion. Suzanne Crouch, currently Indiana’s Lt. Governor, is a candidate for the top job. She raised plenty of eyebrows by proposing the elimination of the state’s income tax. The Indiana state income tax generates one-third of all state revenue, about $8 billion.
How would candidate Crouch make up that revenue? She doesn’t say, but has been quoted as taking the position that she would not seek any other revenue sources. She asserts the state could simply cut spending and find government efficiencies. Crouch has not been specific about what exact spending would be cut or where efficiencies would be found.
Niki Kelly has been covering the Statehouse for a long time, first for the Fort Wayne Journal-Gazette newspaper and now as editor of the news nonprofit Indiana Capital Chronicle. She is a regular panelist on the weekly Public Broadcasting program Indiana Week In Review.
During the August 25th edition of the TV program, Kelly said she appreciates candidates taking strong positions on the issues, but appears a bit baffled by Crouch’s approach to the state income tax.
“The details, from someone who’s covered the nitty-gritty of state budgets, are important,” Kelly said. “(Crouch) said we’re not going to raise any additional taxes. So, then, the idea of efficiencies, we heard again and again, efficiencies. This kind of cracks me up about this conversation. Republicans have been in charge for 20 years. Are there billions of dollars of efficiencies still in state government, or inefficiencies in state government? If so, why? They’ve been in charge for 20 years.”
According to Kelly, finding billions of dollars of efficiencies in the Indiana state budget “is just not realistic.”
Host of the Indiana Public Broadcasting program Brandon Smith pointed out in the same episode that economic development experts say finding a quality place to live with amenities is much more important than tax cuts when it comes to locating a business operation.
Indiana’s income tax is not large, about 5% in most counties. It varies because counties have the choice to levy their own income tax for local governments. If Crouch gets her way, those local governments would lose that funding.
Our state income tax in not progressive, based on experts that study such things. There are 9 states with no income tax. How do they manage that?
It varies by state. For example, Alaska uses revenue from the oil industry. Nevada relies on taxes paid by the gambling industry, but that has been uneven in recent years with more states legalizing gambling (including Indiana).
New Hampshire has no income or sales tax, but does tax businesses to make up the difference, along with very high property tax rates.
I won’t bore you with every state’s situation, but you get the picture. Are there really $8 billion in spending cuts and efficiencies in state government that Hoosiers will not feel in a big way?
I do not pretend to know the answer to that question. It will be up to Suzanne Crouch and other gubernatorial hopefuls to spell out any tax and spending proposals during the upcoming campaign next year.