Indiana is going to raise taxes this session

I read an article today in the Journal Gazette entitled "Fiscal panel approves tax revamp."

<http://www.fortwayne.com/mld/journalgazette/16651961.htm>

Please read this article and educate yourself about what is coming.

First please consider some facts from the Tax Foundation:

<http://www.taxfoundation.org/news/show/335.html>

The Tax Foundation measures the tax burden in each of the fifty states each year. They have performed this service since 1970. The tax burden they measure is the average state AND local tax burden in each state.

The tax burden in each state is EXTREMELY important from an economic development standpoint. Growing companies often move to states for the following reasons:

1. Amenities such as beaches, oceans, parks, mountains, etc.
2. Tax burden and state regulations.
3. A workforce that has the skills that specific employer needs at a reasonable price.
4. Proximity to customers and suppliers.
5. High quality schools for their employees.
6. Etc.

Indiana generally tries to portray itself as a state with a low tax burden and a skilled workforce that can be employed at a reasonable price.

Per the Tax Foundation Indiana and Louisiana are tied and have the 11th HIGHEST tax burden levied by local and state government... There are only 10 states with a higher tax burden. I will rank the top 12 from most expensive to least expensive:

1. Maine. 13.5%
2. New York. 12.9%
3. Ohio. 12%
4. Minnesota. 11.9%
5. Hawaii. 11.7%
6/7 Wisconsin and Nebraska. 11.6%
8. Rhode Island. 11.5%
9. Connecticut. 11.3%
10. Vermont. 11.1%
11/12 Indiana and Louisiana. 11%

Can you believe that California, Illinois, Massachusetts, and New Jersey all have LOWER tax burdens then Indiana as far as State and local governments?

In case you are curious Indiana ranks 30th as far as Federal Tax burden. We are ranked lower then average since our wages are lower then a majority of the fifty states...

The tax burden in Indiana has been steadily increasing for many years.

We are competing against other states that have a much lower tax burden AND more amenities... This does not bode well for Indiana.

So now consider the "Fiscal panel approves tax revamp" article I linked to above...

First of all it is a good idea for us to discuss whether we should shift burden away from property taxes towards income taxes. I think this is a debate we should have.

The Indiana House Ways and Means committee passed an overhaul bill by a vote of 16 - 9.

This legislation would allow local governments to raise their local income rates by another 1%. 60% of this increase would have to be applied to provide property tax relief. The other 40% would be available for NEW SPENDING.

If a county raises its income tax by 1% then it also must raise its corporate income tax by 1% as well. The additional revenues collected from businesses would be used to provide property tax relief.

I took a quick look at the Indiana Budget and the total tax revenue generated by local governments in Indiana.

The below statistics are approximate, it is tax season and I did not spend too much time "crunching the numbers."

If each County raised their income tax by the maximum percentage and if HALF of the promised money were actually used to lower property taxes Indiana would have a total State and local tax burden of about 11.4%

This would end up making it MUCH MUCH harder to draw new businesses to Indiana.

I will be especially interested to read Karen Goldner's thoughts on this post since she has spent so much time working on Economic Development and trying to draw new businesses to this area.

Mike Sylvester