January 30, 2013

South Bend Tribune: Better to pass on this tax cut

media mention

(Original Post)

January 16, 2013

Indiana Gov. Mike Pence is pressing on with his campaign pledge to lower the state’s flat income tax rate from 3.4 percent to 3.06 percent.

Saving taxpayers money and carrying through on promises are laudable goals. Yet cutting this tax seems wrong.

First of all, the state and local tax burden on Indiana families already ranked just below the national average in the nation in the latest Tax Foundation analysis.

And even though the latest revenue projections forecast an increased $1.2 billion in revenue in the upcoming two-year, $29 billion budget, new demands could quickly eat it up.

State costs for Medicaid recipients are expected to climb significantly as the Affordable Care Act is implemented in 2014. The General Assembly is being challenged to identify additional funds for road projects and to restore cuts to K-12 public schools.

Needs of poor children, the elderly and mentally ill aren’t being met — The Tribune has told many of their stories in the last year.

Both Indiana and Michigan in the recent past have rolled back income tax rates and soon, to great dismay, found the public purse inadequate.

Continued uncertainty in the national economy ought to convince the General Assembly that now is not the time to further stem income tax revenue. Gasoline tax revenue is down. Corporate taxes have been trimmed. The inheritance tax is being phased out. And a law already in place provides for an automatic refund to taxpayers when reserves soar.

And then there’s the Institute on Taxation and Economic Policy’s analysis of Pence’s across-the-board tax cut plan which concluded it would mostly benefit the wealthiest taxpayers. The poorest Hoosiers, who devote more of their household budgets to state and local taxes than any other income group, would be helped little, if at all.

Pence’s proposal isn’t justified and it isn’t equitable. Legislators should reject it.



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