Kokomo Tribune; Kokomo, Indiana

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Opinion

January 26, 2014

Indiana twiddling with tax reform

January is the month for the State of the Entity speech by the chief executive. We have the State of the Union, the State, the City and, some places, the County. Most such speeches are recitations of “successes” and outlines of ideas for the future. It is a fine tradition that is sometimes inspirational, sometimes informative, and too often meaningless.

Gov. Pence maintained the tradition. The intent of each specific proposal was to further the state according to the governor’s general philosophy. Hence, pre-kindergarten was endorsed with no assurances that the health and safety of children would be safeguarded better than they are currently in many religious-affiliated day care centers.

The abolition of personal property taxes for businesses was advocated with the proviso that local governments not be hurt (much), and that the burden not be shifted to individuals. Which businesses then will pay the nearly $1 billion in revenues now collected by local governments?

The governor seems to have opened the door for some wonderful fights among the lobbyists representing Indiana’s various business interests. Those firms that buy new equipment will be aligned against those who have no need to modernize equipment. Which tax will the governor raise on those firms not caught in the vise of continuously upgrading equipment?

Last year, Gov. Pence proposed that the individual income tax be reduced by 10 percent. This idea did not sit well with the General Assembly which delayed the idea for a few years. (In case you do not recall, a 10 percent reduction in the 3.4 percent state income tax would reduce the rate to 3.06 percent — making the income tax even more difficult for Hoosier graduates to calculate.)

This year, Gov. Pence called for indexing the personal exemption to the inflation rate. That is more twiddling with taxes to little advantage for the people of Indiana. Revenues would be reduced and the excuse for cutting services enhanced.

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