When Mitch Daniels speaks his mind, he usually thinks through his positions carefully. It was no surprise, therefore, that he thanked Illinois for considering higher taxes to combat its financial difficulties. Higher taxes in our neighboring state, the governor contends in an interview with the Northwest Indiana Times, will drive residents and businesses to Indiana.
Daniels believes, if I may speak for him, that government needs to moderate its programs in times of economic distress. He proudly holds the line on taxes and cuts spending in order to sustain Indiana’s good fiscal condition.
He recognizes our financial problems. Unfunded pensions remain a liability for state and local governments. We are in debt to the federal government because of an underfunded unemployment compensation fund. Our local infrastructure reveals serious neglect.
To balance the Hoosier budget, we (yes, you and I are as culpable as the governor and the Legislature) have cut services to those who are in serious need and often have no voice to object. One example will do: The Bureau of Developmental Disabilities Services has cut funding for people who require 24/7 supervision and assistance. Often, their emergency needs cannot be met adequately. It may be good fiscal management, but it is heartless, dangerous neglect.
Nonetheless, this is the Indiana to which we hope to attract Illinois residents and businesses. Our workers struggle to receive justified compensation for injuries on the job. Our unemployed must make do with less generous payments than similar people in other states. Our schools are inadequate by most measures. Our local streets and roads are in poor-to-dismal repair. Our highway program is more than a generation behind. Ancient sewerage systems all over the state are in need of modernization. Public transit is on life support where it still exists.
All these deficits, but we have a balanced budget!
Do Hoosiers have such low opinions of themselves that they truly condone such neglect? Is private household consumption for Valentine’s Day and Halloween so important that we are unable to raise annual taxes by the amount we spend on those blatantly silly events?
To attract more businesses to Indiana, we could accelerate depreciation on capital investments. That is, if a firm makes an investment in Indiana, the company could recoup that expenditure faster than allowed on the federal return. This would make Indiana a more attractive place for business location and create better jobs for our citizens.
In the long run, a place (city or state) will attract households and businesses through the services it offers, not the taxes it does not collect. Our political leadership knows this, but ignores it. Most public officials focus on election rather than service.
When pandering to the worst aspects of public opinion, elected officials say things like, “My job is to protect the interests of the taxpayer.”
This is sad. The statement presumes that citizens think of themselves only in terms of taxes paid and not services enjoyed. Yet, that is how citizens think, because public officials constantly address us as taxpayers and not as consumers of government services—clients of government agencies.
Language shapes thought. It is time to recognize that we are much more than just taxpayers. Perhaps that is happening in Illinois.•
Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at firstname.lastname@example.org.