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Pence seeks review to simplify Indiana tax code

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Gov. Mike Pence said Tuesday he wants to review Indiana's tax code to simplify it and promote economic development.

"This is not about raising taxes or cutting taxes," Pence said during a summit he called to examine possible tax changes. "This is about trying to look at a way we can reform the tax code and lessen the burden of compliance on Hoosiers and Hoosier businesses and create a more attractive environment for investment in Indiana through tax simplification."

Lawmakers have been cutting taxes fairly routinely in recent years, but a report from the conservative Tax Foundation found that that the average tax burden for Indiana residents grew between 2001 and 2011, in large part because of declining incomes. Lawmakers capped property taxes in 2008, but they also increased the state sales tax by a percentage point, from 6 percent to 7 percent.

Like much of his governing, Pence is starting off with a broad idea and leaving things largely open-ended. The summit, organized by Office of Management and Budget Director Chris Atkins, culled general ideas for tax reform from a mix of national conservative leaders and state and local tax experts.

Anti-tax activist Grover Norquist said no tax-code overhaul should be used to hide tax increases. Meanwhile, Jim Eads, former head of the national Federation of Tax Administrators, told attendees that comprehensive tax reform is often talked about but seldom achieved.

Arthur Laffer, an economist and an economic adviser to former President Ronald Reagan, discussed tax reform and the elimination of income taxes.

He conducted a study on 11 states that previously did not have income taxes but then enacted them.

“Every single one of those 11 states, no exception, has declined in their share of the overall U.S. economy,” he said.

Laffer said state and local officials can only manage to pass income tax rate increases when they promise the money will be used for schools and public services, such as police and fire, with 50 percent to 55 percent being spent on education. In nine of the 11 states in the study, public services actually declined, he said.

He also added that economic growth is the only way for the country – let alone the state – to get rid of income inequality.

Democratic lawmakers and staff attended the daylong event but were not included on any of the panels. House Minority Leader Scott Pelath, D-Michigan City, continued a longstanding criticism of Pence and the state's Republican leaders.

"Notably absent from these proceedings is anyone representing working people or working families trying to get into the middle class," Pelath said in a prepared statement. "Looking at the roster of participants, I'm not sure anyone should be surprised that the middle class has been left out. It's far better for them to lecture others than to get out into neighborhoods and communities to see the impact of their policies."

Despite the supermajorities that Republicans hold in both the House and Senate, Pence has had limited success pushing tax cuts through the General Assembly. His proposal to cut the state's income tax by 10 percent was cut in half and spread out over two years. Legislative Republicans paired it with their own preferred cuts, including the elimination of the state's inheritance tax. And Pence's call earlier this year to eliminate the state's tax on business equipment was dialed back sharply amid opposition from local leaders.

But the governor is laying the groundwork early for any effort to push legislation through the 2015 meeting of the Indiana General Assembly. Senate Appropriations Chairman Luke Kenley, a key budget leader Pence has tangled with in previous sessions, led a discussion at the summit that considered expanding the state's sales tax to services.

Kenley, R-Noblesville, and John Mikesell, a public finance professor at Indiana University, discussed the political ramifications of attempting to tax services, an ever-growing sector of the economy. Kenley cited the political fallout from Florida's attempt to expand its state sales tax.

"It's going to take some effort to prepare the thing that will be acceptable to the public at large, because generally the public is suspicious of tax-type activities. The minute they see something that didn't appear to be running smoothly, well, that's cause to stop the whole exercise," he said.

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  • Rates aren't a problem
    Hopefully the results of his simplification plan do just that and simplify the tax code. Research shows that small business owners aren't concerned with how much they pay in taxes, but are concerned with the ease of filing the taxes (Florida, 2014). Reference: Florida, Richard. (2014) Tax Rates Aren't What Small Business Owners Say They Really Care About. CityLab. Retrieved from http://www.citylab.com/work/2014/06/tax-rates-arent-what-small-business-owners-say-they-really-care-about/372650/
  • Missing research
    "He also added that economic growth is the only way for the country – let alone the state – to get rid of income inequality." Yet economic growth has shown to only increase income inequality. Indiana median income has been on a downward trajectory for more than a decade now, even during years or relatively low unemployment.

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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