Indiana Tax Policy: A Government Against Us

July 16, 2007

For immediate release                                                                                   
623 words

By Craig Ladwig

What good that can be said about Indiana’s economy was not in the governor’s press releases last week. It is in our geographic good fortune to be surrounded by some of the highest-taxing, biggest-spending, most anti-business states in the nation.

Now for the bad news: Indiana government, even during the recent Republican years, has become the enemy of economic growth, the enemy of its citizenry.

Dr. Cecil Bohonan, reviewing recent Statehouse decisions for the current issue of The Indiana Policy Review, makes clear to us that the leaders in both houses of the Legislature, abetted by an arrogant judiciary, protect a tax structure ruinous to the fortunes of our families, friends and neighbors.

They do so for two reasons. First, they have no concept beyond personal ambition of what they want to accomplish. Second, they lack the political courage to risk that ambition even in the interest of what they know to be right.

Hard words. We chose them carefully. Our tipping point came last session. The Legislature, instead of passing a bill to finally cap taxation of private property at constitutionally prescribed levels, raised taxes. And it raised them on the very segment of our society that is the definition of economic growth — business and industry.

Why a government becomes an enemy of its own people is a mystery that won’t be solved here. We can only note that this nation’s founding documents consider it a recurring challenge, that there are times when government must  be . . . yes,  revolutionized is the right word.

Let’s begin with two findings in that same issue of the Indiana Policy Review:

• All Indiana tax rates, not just property-tax rates, are moving inexorably higher. If that continues we can expect near-zero growth through 2030.

• The Hoosier blue-collar middle class is gone. The state lost almost 37,000 production workers between 1963 and 2002.

Why does this last concern us?

For starters, the blue-collar worker kept our democratic system honest. His practical understanding of how the world worked (an understanding often in conflict with his union rhetoric) was based on the reason of experience. Such reason was necessary to holding down a good job and managing a Judeo-Christian family.

His votes balanced out the economic idiocy of the assorted radicals in the Democrat Party as well as the perpetual scheming of Country Club Republicans.

There now is a great hole in the center of the electorate. The loss of the blue-collar family along with the Main Street merchants earlier have left us bereft of economic sense.

Check the opinion polls of the 1970s and 1980s on what Hoosier workers thought about such expensive, ineffective programs as full-day kindergarten, precise numerical racial balance and socialized health care.

It is said there is only one set of numbers that matters in economics — how many are coming and how many are going.

That tally, analyzed by John Tatom of Indiana State University, says our state is in danger of stagnating. It is becoming a casino-financed, cigarette-smuggling third-tier state.

But they tell us Indiana is doing just fine. They point to a tax rate lower than the states around us. They note that unemployment is down.

Please. Investors don’t act on static numbers gathered from economic disaster zones like Ohio, Michigan and Illinois. Low unemployment? Sisyphus was fully employed, for all the good it did. Investors are interested, rather, in the the dynamics of a state economy, the direction it is headed.

And Indiana’s direction?

Reconsider that inexorable rise in taxes. It correlates with an equally steady decline in productive people who call themselves Hoosiers. The message, as Dr. Bohanon warns, is dissuading: “This is not a government that is committed to a limited role.”

That makes Indiana ripe not for capital investment but for electoral revolt.

T. Craig Ladwig is editor of the Indiana Policy Review. Contact him at


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