Morton Marcus
Election season is in full swing. The billboards will appear from those candidates who have loads of money just waiting to be spent. The more billboards and TV advertisements you see, the more alien (non-Hoosier) funding a candidate has.
Not that funding from the domestic netherlands is inappropriate, it’s just so one-sided. Unlike the Civil War, which was fought with guns and blood, this contemporary, uncivil war is being fought with guns and money.
Today, guns are intended to intimidate a fearful citizenry. The money creates supermajorities in state legislatures and legislative constipation in Congress.
With full respect for the powers of state officers (governor, attorney general, state senators and state representatives), they have only powers left over from those assumed by the federal government. (See the history of the 10th Amendment to the Constitution).
In addition, the federal government can require compliance with its wishes by dangling funds before state and local governments. The feds say, “Want to rebuild that road? Certainly! Here are dollars that will help do the job. All you have to do is follow a few of our rules concerning …”
Because state and local governments fear asking citizens to pay a penny more in taxes for a project that will benefit only the residents of that area, federal funding is gleefully sought. While some jurisdictions are too poor to pay for their own needs, most are too cheap and cowardly to pay for what they need after decades of neglect.
Which brings us back to these elections of 2024. Let’s elect candidates who will get higher-income households to pay more into the state general fund to support our ailing localities.
There is an easy way to do that: We already begin Indiana’s income tax collection process by using the Adjusted Gross Income (AGI) as reported on the federal form.
Then we have a long, complicated path to the final amount due Indiana’s Department of Revenue. Add this, subtract that, and divide by your grandmother’s age in 1964 to qualify for a $45 tax credit.
Make it simple. Tax the AGI directly. Forget all the Indiana credits, deductions and exemptions. We already accept the AGI from the feds. Why fiddle as our communities rot?
Instead of the top 1% of Hoosier taxpayers providing 19.4% of the state’s income tax revenue in 2022, they would be responsible for 24.3%. The bottom half of Hoosier income tax payers provided about 14.5% of our $10.6 billion income tax collection. That would drop to 4.8%.
This plan would make Indiana a simpler place to live. Our income tax would be more in line with the equity we seek. Plus, we’d have a reallocation of seasoned employees from the Department of Revenue to other mischief-making state agencies.
Morton Marcus is an economist. Reach him at [email protected]. Follow his views and those of John Guy on “Who Gets What?” wherever podcasts are available or at mortonjohn.libsyn.com. Send comments to [email protected].
