Op-Ed: Republicans in the Dock

July 27, 2016

by Craig Ladwig

Eric Holcomb, Lt. Governor and GOP gubernatorial candidate, has yet another title, Explainer in Chief. And his first comment out of the box — “I want to provide high-quality, good government” — falls short of the times.

Please know that with a supermajority in the legislature, the GOP economic record these last four years is in the dock. That is especially true in regard to small businesses, the engine of local growth.

When compared with the political power Republicans wield, their vaunted income-tax cut (3.3 percent to 3.23 percent) is something to sneer at. Dr. Larry DeBoer, a Purdue economist, tells the Washington Post that an Indiana taxpayer with $50,000 in taxable income will have an extra $3.50 a month beginning next year.

Going down the list of Republican achievements the story is the same. A few more Hoosiers are going to work (0.3 percent) but then there are more Hoosiers. “Economics by press release” prevails, that is, policy designed to produce ribbon-cuttings by attracting large “footloose” corporations with tenuous loyalty to any community foolish enough to help finance them.

Meanwhile, the legislature is pumping out regulation at a pace comparable to the Evan Bayh years, and incumbency rather than policy remains the single best indicator of election. The GOP supermajority, as cynics might say, seems geared to serve the GOP supermajority. For the most exciting ideas in both tax reform and economic develop languish in the expansive Indianapolis offices of the Republican leadership. They are in files marked “Not Doable” and “Wrong Time.”

At the local level, for instance, why not get rid of the so-called economic-development programs and simply and directly exempt the job creators from taxation?

A Fort Wayne councilman estimates that his city abates about $6 million each year. It spends another $2.5 million on economic-development corporations and departments whose primary tool is tax abatement. Add the $10 million the city gives out in grants and stray eco-devo money and you have saved more than the $17 million it collects each year in business personal property taxes.

“Would it not make more sense just to eliminate the tens of millions of dollars of economic development spending and simply stop collecting the tax?” asks Councilman Jason Arp. “Ohio and Illinois have already lifted business personal-property taxes, as have nine other states. Who wants city councilmen sticking their nose in your business?”

But with no political party to protect them, small business was a less-attractive investment these last few years. The Business “Opportunity Perception” scale dropped from a high of 51 percent in 2014 to 47 percent last year, according to a group that monitors entrepreneurship. This is the first drop since the measurement began to rise in 2010.

A Terre Haute businessman and former city councilman, writing in the current issue of The Indiana Policy Review, compares small-business prospects today with those that existed in his father’s day. “We are losing opportunity,” says Ryan Cummins, “losing the freedom to be ‘irrationally optimistic’ like my father.”

Even before Barack Obama took office, the number of new businesses was headed for a statistical cliff. In 2010, the most recent date available for this classification, the nation recorded the fewest new businesses since the Bureau of Labor Statistics had been keeping track — from 4.1 million in 1994 to 2.5 million 15 years later.

And in Indiana, four years of a GOP supermajority notwithstanding, Cummins notes there still are more than 400 different professional-business licenses, permits, certifications and other permissions required to open a shop’s doors.

Eric Holcomb in coming weeks will be making his case for replacing Gov. Mike Pence. His explanations for all of the above are eagerly awaited by a citizenry that knows economic progress when it sees it — and when it doesn’t.

Craig Ladwig is editor of quarterly Indiana Policy Review.


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